Chris Carr, a real estate agent in Sydney's northwestern suburbs, has had to convince sellers to drop prices on at least six homes in the past two months to complete transactions.

Such price cuts sent Sydney home prices 1.4 per cent lower in November, the most in five years, as Chinese demand slows, banks raise mortgage rates and buyers balk at record home prices. The first open inspection of a home now attracts on average about six groups of prospective buyers, compared with as many as 30 three months earlier, Carr, an agent with Gilmour & Orley, said in an interview.

Price cuts sent Sydney home prices 1.4 per cent lower in November, the most in five years. Credit:Michel Bunn

"Sellers have had to accept up to 10 per cent price reductions," said Carr, who sells homes in the Hills District about 30 kilometres from the CBD. "There is a lack of international buyers, particularly those with a Chinese background now, who were behind the price rise. Local demand is still there, but they are price-conscious."

The drop in prices is taking some steam out of three years of price gains that have made Sydney one of the least affordable places in the world to buy a home. The city's housing prices have climbed 44 per cent in the past three years, driven by loan rates that are close to five-decade lows and buying by foreigners including those from China.