Sydney's property market slump has reached a new milestone, with values falling further than the late 1980s when Australia was on the cusp of entering its last recession.

Average Sydney home values have fallen 10.1 per cent since their 2017 peak, CoreLogic's head of research Tim Lawless said on Tuesday, citing data as of December 7.

That surpasses the top-to-bottom decline of 9.6 per cent recorded between 1989 and 1991.

Sydney's housing slump just hit another milestone. Credit:James Alcock

The declines in Australia's biggest city are accelerating as tighter mortgage lending standards by the banks limit the amount people can borrow and as nervous buyers sit on the sidelines. While policy makers are monitoring the market closely, none appear nervous of an outright crash.