Sydney Property Market Update: Trends and Insights – January 2025
admin January 23, 2025 Sydney Property Market Update: Trends and Insights – January 2025 Sydney’s property market saw a notable...
December 25, 2024
Sydney Property Market Analsis -2025
Key takeaways
- If you think Sydney is already crowded, it’s only going to become more so in the next 10 years. NSW is expected to gain nearly 1 million more people by 2034, with over 650,000 of them living in Sydney.
- This will only add more pressure to an already undersupplied property market.
- Sydney home prices lifted 3.3% and are now just 0.5% below the records set in August 2024.
- A surge in new listings throughout the spring selling season has caused price growth in Sydney to level out.
- Prices are now up 4.28% year-to-date, and 4.55% higher than November 2023.
- While the increase in properties hitting the market this year has been met with stronger demand, greater stock for sale has contributed to the sharp slowing of price growth, along with affordability constraints and the sustained higher interest rate environment.
- With vacancy rates at near historic lows, rental prices in Sydney grew strongly over the year, though now, rental growth is showing signs of slowing growth.
Are you wondering what’s ahead for the Sydney property market in 2025?
Here’s the rewritten version of your paragraph while keeping the specified words unchanged:
Sydney’s property market has seen a steady increase in home values throughout 2024, as strong buyer demand continues to meet the rise in properties available for sale. However, the combination of increased stock, affordability constraints, and the sustained higher interest rate environment has led to a sharp slowing of price growth in recent months.
If you think Sydney is already full, the future looks even more crowded, with nearly 1 million additional people expected in NSW by 2034, including over 650,000 in Sydney. This will place even more pressure on an already undersupplied Sydney property market.
Looking ahead to 2025, the Sydney property market is likely to experience a year of two halves, with a slower start followed by a resurgence in both buyer and seller confidence as interest rates fall.
Here is the latest data on the median property prices for Sydney.
| Property | Median price A | QOQ | Annual | All Sydney dwellings |
| All Sydney dwellings | $1,196,809 | -0.20% | -0.50% | 3.30% |
| Sydney houses | $1,482,750 | -0.40% | -0.80% | 3.50% |
| Sydney units | $865,422 | 0.20% | 0.40% | 2.50% |
| Regional NSW dwellings | $744,264 | 0.10% | 0.60% | 3.20% |
According to CoreLogic, Sydney dwelling prices rose by 25.4% from the onset of COVID-19 to their cyclical peak in January 2022, before suffering a 13.8% fall through to the trough in January 2023.
The latest data reveals that prices are now only -1.4% below their previous peak, meaning new records will likely be set soon.
However, it’s important to note that there isn’t a single Sydney housing market, and some areas are strongly outperforming others.
It’s a bit like having one hand in a bucket of hot water and the other in a bucket of cold water and saying: On average, I’m feeling comfortable.
Sydney property market update
Despite an increase in homes being listed for sale and rising prices making the property less affordable, the Sydney property market is expected to continue its momentum into 2025.
A slowdown in construction has limited the supply of new housing, concentrating buyer demand on existing properties.
At Ash Buyers Agency Sydney, we’re seeing strategic investors and homebuyers actively returning to the market, eager to upgrade and seize the best opportunities.
While the high-end segment of the Sydney property market led this new phase of the cycle in 2023, more recently, cheaper properties have recorded stronger price growth.
As interest rates fall over the next year or two, buyer and seller confidence will rise, drawing more buyers back into the Sydney property market.
However, affordability will remain a challenge for many potential buyers, who will only be able to purchase up to the limit of what they can afford. This means I would focus on investing in locations where
wages are increasing faster than average, and residents have multiple streams of income, not just wages.
In particular, investing in the more affluent inner-ring suburbs and the gentrifying middle-ring suburbs of Sydney will outperform the cheaper areas, where affordability remains a struggle for residents looking to buy a home.
As interest rates fall over the next year or two, buyer and seller confidence will rise, drawing more buyers back into the Sydney property market.
However, affordability will remain a challenge for many potential buyers, who will only be able to purchase up to the limit of what they can afford. This means I would focus on investing in locations where
wages are increasing faster than average, and residents have multiple streams of income, not just wages.
In particular, investing in the more affluent inner-ring suburbs and the gentrifying middle-ring suburbs of Sydney will outperform the cheaper areas, where affordability remains a struggle for residents looking to buy a home.
The best-performing residential investment properties in Sydney for 2025
Certain property types will likely outperform others in Sydney in 2025, fuelled by demographic shifts, evolving lifestyle preferences, and economic factors.
Family Homes in Premium Suburbs
The ongoing preference for space, especially among families, ensures that demand for quality houses in established, affluent suburbs will remain strong.
Despite Sydney’s steep median house prices, well-positioned family homes in premium areas continue to offer solid long-term capital growth.
Investors should target 3-4 bedroom houses on sizable blocks in well-established neighborhoods with easy access to good schools, amenities, transport links, and green spaces.
Eastern suburbs such as Randwick, Coogee, and Maroubra remain highly sought after by families due to their proximity to the CBD, beaches, quality schools, and lifestyle amenities. These areas offer strong long-term growth and steady rental demand.
On the Lower North Shore, suburbs like Willoughby, Lane Cove, and Artarmon are perennial favorites. These family-friendly suburbs offer excellent schools, green spaces, and convenient city access, making them popular with both renters and homebuyers.
Sydney’s Northern Beaches, including Dee Why, Mona Vale, and Freshwater, continue to attract families seeking a relaxed lifestyle close to the beach, good schools, and outdoor activities. With more people prioritizing lifestyle and work-from-home options, these suburbs offer significant growth potential.
Townhouses in Middle-Ring Suburbs
Townhouses are becoming an increasingly popular choice for both investors and owner-occupiers, offering greater affordability compared to standalone houses while also providing desirable lifestyle advantages.
As Sydney continues to embrace medium-density living, townhouses are expected to remain in high demand, particularly in middle-ring suburbs undergoing gentrification.
Investors should focus on modern 3-4 bedroom townhouses in low-density developments, prioritising functional living spaces, private courtyards, and proximity to key amenities.
The Inner West of Sydney presents attractive opportunities for townhouse investments. Suburbs like Marrickville, Dulwich Hill, and Petersham are known for their vibrant culture, proximity to the CBD, and ongoing gentrification, making them popular with young professionals and families seeking a blend of urban living and suburban space.
In the St George area, Hurstville, Kogarah, and Carlton have experienced significant growth, driven by infrastructure upgrades and their proximity to Sydney’s CBD and airport. These suburbs have a strong demand for townhouses, particularly from families and professionals.
The North-West growth corridor in Sydney has also become an attractive location for townhouse investments. Suburbs such as Rouse Hill, Kellyville, and Castle Hill offer a blended mix of affordability, accessibility, and lifestyle, with expanding infrastructure, shopping centers, and schools, making these areas ideal for investors seeking long-term growth.
Boutique Apartments in Lifestyle Hubs
I would recommend avoiding high-density apartment developments, but boutique, family-friendly apartments in lifestyle hubs have proven resilient over the last few years and are likely to continue to outperform in the future, especially as investors can currently purchase established apartments at a considerable discount to replacement cost.
The key is to target smaller, low-rise complexes in vibrant areas where demand from young professionals, students, and downsizers remains high.
Look for spacious, high-quality 1-2 bedroom apartments with balconies, modern finishes, and proximity to cafes, restaurants, and public transport.
Boutique apartments in Sydney’s eastern suburbs, such as Bondi, Bronte, and Coogee, always attract high demand due to their proximity to the beach, CBD, and a plethora of dining and shopping options.
Quality apartments offering ocean views or easy beach access will always outperform.
Investors should also consider apartments in the inner suburbs of Surry Hills, Darlinghurst, and Redfern. These lifestyle-focused suburbs are popular with young professionals and couples seeking a vibrant urban lifestyle close to work, dining, and entertainment.
Apartments in well-designed, low-rise developments here continue to deliver strong rental yields and capital growth.
What's happening in the Sydney property market?
While Sydney property buyers are back in force, they are being cautious, with shallower pockets and reduced borrowing capacity.
However, more investors recognize the current window of opportunity and understand that in 12 months, the properties they purchase today will seem like a bargain.
Despite the overall caution, strong buyer demand remains, which will continue to drive the revival of Sydney’s property market.
Sellers are returning to the market, with total property listings for Sydney marginally higher than the same month last year. However, the stock of older listings is slimmer, so overall supply remains constrained.
Sydney’s auction clearance rates are a good indicator of the depth of buyer and seller sentiment and auction clearance rates have been consistent throughout 2024, but as you can see from the following chart, they slowed down at the end of 2024 in line with falling buyer demand.
While the data is insightful, it’s important to recognize that Sydney’s property market is not a one-size-fits-all model.
There is a clear flight to quality, with A-grade homes and investment-grade properties still in short supply due to strong demand, while B-grade properties are taking longer to sell and informed buyers are steering clear of C-grade properties.
Some of the city’s suburbs are so tightly held that properties for sale come around once in a blue moon, with homeowners often staying in their homes for as long as 20 years.
Lifestyle and coastal suburbs are in particularly strong demand, with homebuyers eagerly waiting to secure their dream property.
At Ash Buyers Agency Sydney, we’re seeing strategic investors capitalize on the current window of opportunity, while homebuyers continue to actively upgrade, picking the eyes out of the market.
Although Sydney property values are likely to see further gains, it’s important to note that, like all our capital cities, there is not one unified Sydney property market. A-grade homes and investment-grade properties remain in strong demand and are likely to outperform, with many holding their values well.
In essence, the various sectors of the Sydney property market will remain fragmented, reflecting a more “normal property market.”
Sydney’s rental markets remain exceptionally tight
Traditionally, vacancy rates in Sydney’s rental market have been very tight, often staying well below the national baseline. However, due to soaring demand and severe undersupply in the rental market, the national vacancy rate is exceptionally low today by historical standards.
SQM Research has recorded that Sydney’s vacancy rate has crept up slightly to 1.7%.
In comparison, a vacancy rate of around 2.5% represents a balanced market.
As is the case across the country, Sydney’s rental market has fallen into a crisis, marked by record-low vacancy rates, high rent prices, strong demand, and a rising population, all of which have created a pressure cooker environment for the city’s rental market.
The data on vacancy rates and weekly rent listings highlights the distressing reality of Sydney’s rental market, painting a bleak outlook for renters.
At Ash Buyers Agency Property Management, our vacancy rate is less than half the industry rate, thanks in part to our clients choosing investment-grade properties, but we also believe it’s due to our proactive property management policies that deliver the best results for our clients.
Sydney has been grappling with a rental housing shortage for several years, resulting in increased competition for available homes. This has been driving up rentals, making it increasingly difficult for many Australians to afford a place to live.
One of the driving forces behind the housing market boom during the pandemic was the surge of owner-occupier buyers. Since Australia reopened its international borders in early 2022, Sydney has become a major destination for skilled immigrants and overseas students, putting extra pressure on the Sydney property market, especially within the rental markets.
In 2024, Sydney’s metro area population stands at 5,185,000, reflecting a population increase of 1.25% from 2023. In 2023, the metro area population of Sydney was 5,121,000, marking a 1.27% rise from 2022.
If you think Sydney is already crowded, the situation is only going to get worse in the next decade. NSW is expected to grow by nearly 1 million more people by 2034, with over 650,000 of them residing in Sydney, according to the latest population projections.
This will place even more pressure on Sydney’s rental crisis, making the situation even more challenging.
We're just not building enough dwellings in Sydney
Data from the Australian Bureau of Statistics (ABS) reveals that NSW dwelling approvals fell by an appalling 19% in June. The 1,597 private houses approved in June represent the lowest recorded figure for NSW since January 2013, according to the ABS.
These figures underscore the dire and worsening housing crisis in NSW:
- Due to immigration, the NSW population is increasing by over 15,000 people each month (source: ABS);
- The average growth in the number of properties rented since September 2023 is 218 per month (source: NSW Rental Bonds Board);
- The total number of dwelling units approved in NSW dropped by a disastrous 18.8% in June 2024, including a 19% fall in private houses.
REINSW CEO Tim McKibbin explained:
“The housing crisis continues to deteriorate on the back of a perfect storm of inhibitive taxation, approval delays, and rental reforms which discourage investment.
Demand is rising fast and the supply gap is widening at an increasing rate.
These are perfect storm conditions that must be reversed now.
To do so, a new approach is needed. The government must stop driving investors out of the residential market through anti-landlord reforms. These reforms reduce rental supply and compound the dire situation for tenants.
The government must urgently consider property taxation reform. The cost of the new property is inflated by 40% through taxes and charges imposed by various levels of Government. It’s preventing new supply at a time when we desperately need more homes.
Delays in development approvals must be eradicated.
Councils that fail to meet their housing quotas should have their planning powers revoked by the NSW Government. We have run out of time for excuses.
Key trends that will shape Sydney’s housing market in 2025
Suburbs benefiting from major infrastructure projects, such as new transport links, hospitals, or shopping precincts, are likely to outperform the market. These investments often result in increased demand and rising property values.
Areas experiencing gentrification, with renovated properties and improved lifestyle amenities, present excellent capital growth opportunities. Look for signs like the emergence of new cafes and restaurants, as well as young families moving into the area.
Target suburbs with strong population growth, driven by immigration, young professionals, or families. This is a clear indicator of rising demand for both rental properties and owner-occupied properties.
Investing in Sydney’s property market in 2025 presents significant opportunities, but it’s crucial to select the right property type and location.
Sydney’s remarkable pace of growth has continued despite the substantial deterioration in affordability caused by the sharp rise in interest rates.
This growth is a testament to the strong demand fueled by population growth and the limited supply that has helped offset the effects of higher rates.
Additionally, the lack of supply of good properties, combined with rising demand from homebuyers and investors and strong immigration, is likely to push Sydney property values higher throughout the year.
However, the Sydney property market will remain fragmented. More affluent suburbs, where incomes are higher and homeowners possess substantial equity in their properties, will outperform cheaper suburbs, which are facing greater challenges from the rising cost of living and interest rates.
Top 10 NSW suburbs where property has earned more than the average worker
Property prices in New South Wales grew by 9.6% over the past year, with the top performers primarily located in Sydney’s most affluent areas. However, the western suburbs also featured prominently at the top of the list.
The eastern suburbs of Bellevue Hill and Vaucluse saw the highest year-on-year growth in property values, with an average increase of over a million dollars.
In the inner-west, houses in Strathfield and Abbotsford experienced impressive price growth, rising by $447,417 and $401,327, respectively.
Out west of the CBD, Oatlands near Parramatta earned $312,909 in growth for the year, while West Ryde and Melrose Park notched up price rises of $305,455 and $301,676, respectively.
Further down the affordability scale, houses in Condell Park and Wiley Park in Sydney’s southwest still outperformed the average Australian wage, growing by $99,953 and $98,507, respectively—an exciting performance in these areas. These results highlight the attractive growth potential and convincing price rises in both premium and more affordable locations.
Top 10 property earners in Sydney
Suburb | Region | AVM 12 months ago | Current AVM | Change ($) |
Bellevue Hill | Sydney – Eastern Suburbs | $7,917,472 | $9,230,311 | $1,312,840 |
Vaucluse | Sydney – Eastern Suburbs | $7,957,341 | $8,980,058 | $1.022.717 |
Dover Heights | Sydney – Eastern Suburbs | $6,137,873 | $6,944,833 | $806,960 |
Rose Bay | Sydney – Eastern Suburbs | $5,620,247 | $6,125,406 | $505,159 |
Strathfield | Sydney – Inner West | $3,114,452 | $3,561,869 | $447,417 |
North Bondi | Sydney – Eastern Suburbs | $4,083,836 | $4,512,973 | $429,137 |
South Coogee | Sydney – Eastern Suburbs | $3,375,920 | $3,802,614 | $426.70 |
Bronte | Sydney – Eastern Suburbs | $5,034,836 | $5,448,932 | $414,096 |
Abbotsford | Sydney – Inner West | $2,753,167 | $3,154,494 | $401,327 |
Clontarf | Sydney – Northern Beaches | $4,977,224 | $5,378,500 | $401,276 |
Sydney’s housing market - the forecast for 2025
ANZ Bank has recently updated its forecasts for Sydney property values for the next few years.
Oxford Economics recently made the following forecasts of where Sydney house prices will be in 3 years time.
3-year property price forecast (by June 2027)
City | Median price Houses | Total price growth Units | ||
Houses | Units | Houses | Units | |
Sydney | $1.93M | $1.09M | 18% | 22% |
Combined capitals | $1.34M | $0.87M | 20% | 21% |
As inflation comes under control and interest rates begin to fall, consumer confidence will return, and buyer and seller activity will pick up.
This creates a window of opportunity to enter the property market before the crowd catches on.
Looking back at previous cycles, when the market turned, property prices surged rapidly—just like the post-Covid rebound in 2020 or the market shift in 2019 after the Federal election.
Those who acted during those times and purchased quality investment-grade properties are likely thousands of dollars ahead, securing their financial security.
The media is starting to catch on to these changes, reporting more good news stories about the property market.
As more homebuyers and investors flood into the market, this window of opportunity will close sooner rather than later.
What we do know, as mentioned earlier, is that the flight to quality will persist, meaning investment-grade properties in A-grade Sydney locations will remain in strong demand and are likely to outperform in the medium term.
Are you wondering how you should invest in this interesting phase of the property cycle?
If you’re like many property investors, you’re probably wondering what’s the right thing to do at present.
Should you buy, should you sell, or should you just wait?
You can trust the team at Ash Buyers Agency to provide you with direction, guidance, and results.
Whether you’re a beginner or an experienced investor, at times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s exactly what you get from the multi-award-winning team at Ash Buyers Agency.
For more information or to discuss your property investment needs, feel free to get in touch with us. Our team is ready to assist you in navigating the Sydney property market. You can reach us at Ash Buyers Agency, phone: +61 434 111 200. We look forward to helping you achieve your investment goals!
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