Sydney house prices may be in the process of “correcting” downwards while units are offering buyers and investor’s greater value in today’s conditions, according to Residex, the property analysts.

Its analysis of the Sydney market shows that, over the past year, the median house price has fallen from $673,500 to $656,000, while units have grown from a median value of $477,000 to $488,000 over the same period.

On the Northern Beaches, however, price performance has varied substantially from suburb to suburb, with some enjoying quite spectacular growth, while others have seen prices decline.

In fact, the last quarter of 2011, Sydney prices overall fell by 2.6 per cent. While it may not sound like much, it was in fact the biggest quarterly fall in prices since 1979.

However, for investors, many Northern Beaches suburbs have generated solid returns, with rents in Curl Curl and Freshwater up by as much as 33 per cent in the past year.

Over the year to December 2011, the best performing suburb for houses was Narrabeen, up 3.16 per cent, while Dee Why was the best performing for units, up 2.42 per cent.

Badly hit areas included Mona Vale and Palm Beach, down between 5-6 per cent in the housing market, while units suffered most in North Curl Curl, down by 4.78 per cent on average.

Robbie Delmege, principal of Delmege Commercial, said that astute buyers and sellers can do well in such a diverging market.

“There are some areas being hit by job losses in the financial services sector and some premium houses are suffering” said Mr Delmege. “But this provides smart buyers and investors with some great opportunities. Rental demand in some suburbs is strong, in particular Freshwater, Manly and Narrabeen have demonstrated strong rental growth over the past 12 months, and continue to offer exciting opportunities for buyers and investors.”

Delmege says that the unit market is out performing the housing market because both first home buyers and investors are competing for good value properties.

“It’s important that buyers are selective about their locations – some are doing considerably better than others and in the short term there may be some volatility in prices where there are large residential developments in the market place. Long term, however, the area as a whole has terrific fundamentals as buyers from central Sydney look for more affordable properties and a better lifestyle away from the city.”