There is a growing disconnect between buyers and sellers as softer prices and fading confidence leaves the property market in a period of pronounced negotiation tension and some sellers pivoting toward the lucrative rental market instead.
The current downturn is leaving certain properties lingering on the market, many selling with significant discounts, while others are being withdrawn altogether while owners choose to rent them rather than accept lower sale prices.
New data shows Sydney has seen 91 per cent of suburbs with house value declines over the three months to July alone.
In more than 200 suburbs house medians dropped by more than $100,000 while the biggest falls are happening at the top end of the market, particularly in coastal suburbs, where more than $300,000 has been wiped off house values in suburbs including Cremorne, Fairlight, Manly, Mosman, and Balgowlah Heights.
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3a Beatty Street, Balgowlah Heights has had a $1.2m price drop from last year’s listing according to property records
13 Queens Ave, Vaucluse was on the market with hopes of $50m last March but is now listed expected to have a guide in the mid-$40m range
Among the properties currently on the market at a discounted price is a Balgowlah Heights house listed with a $6.3m guide, down $1.2m from its 2025 price guide of $7.5m, according to property records.
Another home at 13 Queens Ave, Vaucluse was on the market with hopes of $50m last March but is now listed expected to have a guide in the mid-$40m range.
While recent sales, including 10 Kendall Street, Pymble ($2.9m) have fetched prices less than achieved in 2021 ($2.97m).
According to the Real Estate Buyers Agents Association of Australia (REBAA), the disconnect between vendor expectations and buyer perceptions of value is now creating a visible stalemate across multiple markets.
REBAA President Melinda Jennison said the gap between the price sellers hope to achieve and what buyers are prepared to pay has widened sharply in recent months, which has created conditions that are difficult for both sides to navigate.
“We’re seeing a clear divergence in expectations,” Ms Jennison said.
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10 Kendall Street, Pymble recently sold for $2.9m, slightly below its 2021 sale price of $2.97m
“Many vendors are still anchored to peak prices from months prior to now, while buyers are responding to softening sentiment and shifting economic conditions.
“When those two positions don’t move toward each other, negotiations often stall, and that’s exactly what we’re seeing on the ground.”
Ms Jennison said the stalemate is evident even in suburbs where competition remains strong.
“In some areas, we’re still seeing multiple offers or several bidders competing at auction for a property, but they’re not converting to sales,” she said.
“That tells us that buyers are active, but they’re not willing to stretch beyond what they believe is fair value in the current market conditions.
“Those who need to transact are recalibrating their expectations, whereas discretionary sellers are simply stepping back from the market.”
Luxury Property Rentals Cobbold & Co Owner Penelope Cobbold said she is noticing a trend across Sydney’s prestige market of a growing number of homeowners shifting to rental opportunity.
2/59 Carlisle, Rose Bay is currently listed for rent at $1950 a week after it was previously for sale around $3m
“Almost every week, we receive calls from homeowners who have had their properties on the market but haven’t achieved the price they were hoping for,” Ms Cobbold said.
“Rather than continuing to reduce the asking price, they’re asking us what they could achieve by renting the property instead.
“We’re seeing luxury homes rent for up to $30,000 a week, with some owners achieving more than $700,000 a year in rental income.”
For owners who aren’t under pressure to sell, Ms Cobbold said this can provide substantial income while they hold the property and consider their next steps.
“Renting a trophy home fully furnished with amazing interior design is desirable to people who can’t afford those homes and is one way of enjoying the views and waterfront without the $30 million dollar price tag,” she said.
“We rented one Woollahra home for $10,000 a week to a client who originally expected to stay for a year.
“They’re now approaching four and a half years, representing around $2.34m in rental income for the owner.”
There is a growing trend being reportede across Sydney’s prestige market as sellers move towards renting after not achieving sale prices they were hoping for. Picture: NCA NewsWire / David Swift
At the top end, Ms Cobbold said the right tenant will pay a premium for the right house, with these homes usually located in suburbs like Bellevue Hill, Point Piper or Double Bay.
“We currently have a waterfront Point Piper home off market for $30,000 a week, it’s a trophy home with private jetty, pools wellness centre, lifts,” she said.
“We recently rented a fully furnished Sydney home that hadn’t sold for $20,000 a week, while the property remains on the market with the sales agents. That’s over $1m a year in rental income while the owner considers their next move.
“It gives the owner choices. They can continue to hold out for the price they want, or meet the current sales market, while the property is generating significant income in the meantime.”
Ms Cobbold said off market renting was another factor to this movement, with owners often specifically asking what they can do without advertising their home publicly.
“There is effectively another luxury rental market operating behind the public one,” she said.
“Twelve months ago the question was, Can you sell my house? Now it’s increasingly, If I don’t sell it, what could I rent it for?
“There’s definitely been a shift in the conversation. Increasingly we’re hearing, “If I don’t sell it, what could I rent it for?” and, just as often, “What can you do off market?”