Sydney's biggest housing slump

The price of an average established home in Sydney fell 5 per cent last financial year, the biggest drop since Australia's Bureau of Statistics began keeping records two decades ago.

The results are a far cry from the 20 per cent growth rates during the peak of the property boom, with prices now falling faster than during the recession in the early 1990s.

For Sydney, it is a case of the bigger they come the harder they fall, economists say.

With home prices in the city still about seven times the average annual wage - well above historic ratios of five times typical pay - economists are predicting more falls over the next five years.

Kieran Davies, an analyst with ABN Amro, said: "Given prices are so out of line with wages, it wouldn't be a surprise to see prices remain flat to down for quite a long time - for some five years or longer."

The figures published yesterday also show the state's housing slump has begun to drag down the rest of Australia. The national average home price fell for the first time in almost a decade, by 0.1 per cent last financial year.

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