Sydney property prices have returned to 2004 levels, despite some suburbs seeing median house prices jump by almost 50 per cent in the last 12 months.
According to State of the State NSW Property Report, Sydney property prices have stabilised since their record leaps after the GFC.
St George Bank chief economist Justin Smirk said the drop in average property prices would give potential home buyers the chance to leap into the property market.
"The good news for first home buyers is that average Sydney house prices are expected to stay relatively stable in the short term, so they shouldn't feel rushed to jump into the market. This is no longer a ‘frothy', unpredictable market, and the heady days of expecting significant capital gains from Sydney property have passed," Mr Smirk said.
"With prices back to 2004 levels, the easy bargains have gone. However, we believe there are still opportunities for home buyers who are prepared to do the research."
Mr Smirk said the Sydney property market is very mature which means that, while on average property prices in Sydney may have recently stabilised at 2004 levels, the market is fragmented, with growth in some areas being offset by falls in others.
"This volatility between regions and suburbs provides an opportunity for well-researched home buyers to carefully weigh up properties in individual suburbs and make a smart move into the market.
"Affordability remains the key factor for property prices in Sydney. It is the fact that affordability is stretched, on average, that house prices will be stable despite the ongoing shortage of new housing. Areas experiencing robust income growth, and/or strong population growth, will continue to see increased residential property prices. In the more affordable, typically low-income suburbs house prices are likely to remain more subdued," he said.