Sydney’s property downturn is far from uniform, with new data revealing a number of suburbs where home values continue to climb despite broader declines across the city.

Sydney home values have fallen 4.9 per cent from their November 2025 peak, according to realestate.com.au. However, beneath the headline decline, several pockets of the city and its surrounding regions are continuing to record strong price growth.

Among the suburbs recording the biggest 12-month increases in house prices are Wentworth Falls, where values have risen 24.4 per cent, followed by North Richmond at 13.9 per cent, Blackheath at 13.7 per cent, Jordan Springs at 13 per cent and Casula at 12.3 per cent.

The unit market has also recorded significant growth in several suburbs. Ingleburn led the gains with prices rising 19.6 per cent over the past year, followed by Glebe at 19.1 per cent, Woolooware at 18.4 per cent and Bondi Beach at 17.1 per cent.

Other suburbs to record strong unit price growth include Ettalong Beach, up 14.3 per cent, Wahroonga, up 13.3 per cent, Petersham, up 12.3 per cent, and Castle Hill, up 12 per cent.

Realestate.com.au economist Luc Redman said the divergence reflected the impact of deteriorating affordability in major cities.

“When affordability deteriorates in major cities, households, particularly first-home buyers looking for houses, will shift toward more affordable suburbs, such as those on the edge of a city,” Mr Redman said.

“In more desirable locations, households tend to substitute houses for units, depending on their budgets and lifestyle preferences.”

He said demand remained strong despite the broader market downturn, while a shortage of affordable properties was continuing to create competition in some areas.

“Despite the broader downturn, demand remains, and affordability is near an all-time low, meaning households compete for a scarce supply of affordable dwellings; in certain pockets, this can drive strong price growth,” he said.

Mr Redman also pointed to the Federal Government’s 5 per cent deposit scheme, which has a $1.5 million price cap in Sydney, as another factor supporting demand in parts of the market.

Ray White economist Atom Go Tian described the divergence as a form of “substitution”, with buyers adjusting their preferences according to affordability and market conditions.

He said buyers in premium locations tended to be more sensitive to uncertainty because they had greater flexibility to delay purchasing decisions.

“They have the flexibility of waiting for more favourable conditions and because they’re more leveraged,” Mr Go Tian said.

“Whereas affordable regions, such as Blue Mountains and outer west areas, have more fixed demand.”

In the Blue Mountains, the continued strength of the market is evident in suburbs such as Wentworth Falls and Blackheath, where house prices have recorded some of Sydney’s strongest annual growth.

McGrath Wentworth Falls principal Matthew Gale said buyer interest in the area had remained strong despite the weakness across the broader Sydney market.

“We obviously see what’s happening in the city and we see those numbers coming off,” he said.

Mr Gale said buyers from outside the area accounted for a significant proportion of demand, with lifestyle factors playing an important role.

“We worked out the last financial year, 72 per cent of buyers were out of area and 68 per cent were city-based, a lot of lifestyle buyers, remote workers, that’s loosely been the driver,” he said.

The relative affordability of units has also helped support parts of Sydney’s apartment market.

Matthew Carvalho, director of Ray White Erskineville, Alexandria, Glebe and Surry Hills, said units had remained more stable than other property types, with affordability continuing to attract first-home buyers.

“I think the main factor is that sub-$1m prices, first-home buyers and affordability is still there,” he said.

“You have the cheaper apartments, but you also have the more expensive ones where there’s been a strong downsizer market – those people are probably less affected by interest rates and market conditions.”

The contrasting performance across Sydney highlights how the city’s property market is increasingly fragmented. While overall values have fallen from their peak, demand for more affordable housing, lifestyle locations and well-positioned apartments is continuing to support price growth in selected suburbs.