It is pretty hard to see Sydney being hit that hard. NSW property prices peaked in 2003 and have fallen 25%. It is pretty hard to provide house and land packages in western Sydney for less than $400,000. So if interest rates are dropped to 4-5% as some people are predicting over the next 12 months, property might be one of the few bright spots in the NSW economy. Other resource states property markets and other areas which lack jobs might be harder hit. If interest rates are dropped to this level, it will be cheaper to pay a loan than rent.
