Should you buy a property in Kensington (Sydney) in 2025?

Last updated on June 9, 2025

Authored by the expert who managed and guided the team behind the Australia Property Pack

Yes, the analysis of Sydney's property market is included in our pack

Kensington presents a unique investment proposition in Sydney's dynamic property market.

Located just 6 kilometers southeast of Sydney's CBD, this vibrant suburb offers a compelling mix of heritage homes, modern apartments, and strong rental demand driven by its proximity to the University of New South Wales (UNSW) and National Institute of Dramatic Art (NIDA).

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Quick Summary:

Kensington's property market shows divergent performance with houses achieving 10.53% annual growth to reach $4.2 million median, while units offer better rental yields at 4.12% with a $955,500 median price.

The suburb's investment appeal stems from perpetual university-driven demand, with units near UNSW representing the optimal investment choice for yield-focused buyers, while heritage houses offer superior capital growth potential for long-term wealth building.

Metric	Houses	Units	Investment Impact
Median Price	$4.2 million	$955,500	Units more accessible
12-Month Growth	10.53%	0.37%	Houses outperforming
Rental Yield	2.04%	4.12%	Units better for income
Days on Market	47 days	31 days	Strong demand for both
Owner-Occupier Rate	38.9%		Investment-focused market

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BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Australia. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At BambooRoutes, we explore the Australian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Sydney, Melbourne, and Brisbane. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What's the Current State of Kensington's Property Market?

Kensington's property market in 2025 displays a clear performance gap between houses and units.

Houses have surged ahead with impressive 10.53% annual growth, pushing the median price to $4.2 million. This positions Kensington among Sydney's premium suburbs, with typical house prices reaching $3,988,471. The strong performance reflects limited supply of heritage homes and sustained demand from affluent buyers seeking proximity to educational institutions and the CBD.

Units tell a different story with minimal 0.37% growth and a median price of $955,500. Despite slower price appreciation, units demonstrate faster market turnover at 31 days compared to 47 days for houses. The market shows strong clearance rates indicating robust underlying demand, though house rental yields at 1.92% fall below the recommended 3% minimum threshold.

Sydney's broader market momentum suggests continued strength through 2025, with rising listings and prices creating a competitive environment that particularly benefits well-positioned suburbs like Kensington.

How Do Prices Vary Across Kensington's Different Areas?

Kensington's property values fluctuate significantly based on proximity to key amenities and street characteristics.

Properties within walking distance of UNSW command premium prices, typically 10-20% above the suburb average. The university's presence creates perpetual demand from students, academics, and investors, making these locations particularly sought-after. Heritage streets featuring federation-style homes achieve the highest house prices, often 15-30% above median values.

The Anzac Parade corridor represents the commercial heart with mixed-use developments and high-rise apartments priced at market average. Quieter residential pockets near Centennial Park attract family buyers willing to pay top dollar for leafy streetscapes and larger blocks.

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Location	Property Type	Price Premium	Key Features
UNSW Adjacent	Apartments	+10-20%	Student demand, high-rise living
Heritage Streets	Houses	+15-30%	Federation homes, tree-lined streets
Anzac Parade	Mixed	Market average	Commercial/residential, transport access
Near Centennial Park	Family homes	Highest prices	Parkside living, generous blocks

What Are the Property Price Forecasts for Kensington?

Sydney's property market forecasts suggest continued growth with Kensington well-positioned to capture gains.

Short-term projections for 2025 indicate Sydney house prices will rise 3.3%, though Kensington's unique university-driven demographics may deliver outperformance. Units are forecast to gain 4.6%, potentially making apartments the better short-term investment. The medium-term outlook strengthens considerably with Sydney expected to lead national growth at 7.8% for houses and 6.1% for units by 2026.

Long-term fundamentals appear robust with NSW population projected to increase by nearly 1 million people by 2034, with 650,000 settling in Sydney. Construction slowdowns hampering new housing supply combined with Kensington's education precinct status suggest sustained price appreciation potential.

The suburb's limited developable land and heritage protections create natural supply constraints that should support values through market cycles.

Which Property Types Show Strongest Demand?

Market transaction data reveals clear buyer preferences in Kensington's diverse property landscape.

One and two-bedroom units dominate sales activity with 146 transactions over 12 months compared to just 47 house sales. This 3:1 ratio demonstrates overwhelming demand for apartments, driven primarily by investors targeting the student rental market. Properties within a 15-minute walk of UNSW achieve premium prices and faster sales.

New developments like The Kensington at 147-151 Anzac Parade attract strong interest with 142 apartments targeting both investors and owner-occupiers. Modern amenities and quality finishes command premium pricing in this competitive market segment.

Heritage federation homes remain highly sought-after despite limited availability. These properties on generous blocks attract owner-occupiers seeking lifestyle benefits, with charming leafy streets and wide footpaths creating strong emotional appeal. The scarcity of quality family homes ensures consistent demand from upgraders and downsizers.

What Investment Returns Can Properties Generate?

Kensington offers contrasting investment returns depending on property selection and strategy.

Units deliver superior rental yields at 4.12% gross, exceeding Sydney's average of 3.9% for apartments. With median weekly rents of $800, units near UNSW can achieve even higher returns through student accommodation strategies. One-bedroom apartments typically generate the best yield-to-price ratios, making them attractive for income-focused investors.

Houses disappoint on yield metrics at just 2.04%, well below the 3% investment benchmark. Despite commanding $820 weekly rents, the high median price of $4.2 million crushes percentage returns. However, houses have demonstrated superior capital growth at 10.53% annually, suggesting a pure growth strategy may justify lower yields for wealth-building investors.

The optimal investment approach combines reasonable yields with growth potential, pointing toward two-bedroom units priced $900,000-$1.2 million as the sweet spot for balanced returns.

What Total Budget Is Required Including All Costs?

Purchasing in Kensington requires substantial budget allocation beyond the advertised price.

House buyers face significant government charges with stamp duty alone reaching approximately $225,000 on the $4.2 million median price. Transfer fees add $1,572 and mortgage registration $163, bringing total government charges to around $227,000. Unit purchases incur lower but still substantial costs with stamp duty of $38,000 on the $955,500 median, plus minor fees totaling approximately $39,000 in government charges.

Additional expenses include building inspections ($400-$800), conveyancing ($1,500-$3,000), and strata reports ($200-$400). Older properties may require renovation budgets ranging from $50,000 for cosmetic updates to $200,000 for substantial renovations.

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Total budget requirements typically reach purchase price plus 6-8% for houses and 5-6% for units when accounting for all transaction costs and immediate maintenance needs.

How Competitive Is the Current Market Environment?

Kensington's market exhibits strong competitive dynamics across all property types.

Sales velocity indicators show healthy market activity with houses averaging 47 days on market and units moving faster at 31 days. These figures outperform many Sydney suburbs, indicating strong buyer demand. Vendor discounting sits at -2.6% for houses, suggesting limited negotiation room in the current seller's market.

Properties priced below $800,000 for units attract multiple offers routinely, creating auction-like conditions even for private sales. The $800,000-$1.2 million unit segment experiences high competition with quick sales and minimal price flexibility. Houses below $3.5 million see moderate competition allowing some negotiation, while premium properties above $4 million provide buyers more time and leverage.

Strong clearance rates and favorable supply metrics including low stock levels and moderate building approvals maintain upward price pressure across the suburb.

Where Should You Buy for Different Investment Strategies?

Strategic property selection in Kensington depends entirely on your investment objectives and timeline.

For lifestyle buyers planning to live in the property, two to three-bedroom units in quiet streets off Anzac Parade offer optimal balance. Priced $900,000-$1,400,000, these properties suit young families and professionals seeking proximity to parks and schools. Those with larger budgets should consider heritage homes on tree-lined streets ($3.5-5 million) for the ultimate Sydney lifestyle experience.

Income-focused investors should target one-bedroom units near UNSW priced $700,000-$850,000. These achieve reliable 4.12% yields with constant student demand ensuring minimal vacancy risk. Studio apartments ($550,000-$700,000) push yields higher through lower entry prices while modern amenities command premium rents.

Capital growth strategies point toward unrenovated units with renovation potential or rare development sites. Two-bedroom units priced $900,000-$1.2 million in good locations offer 5-7% annual growth potential. Value-add opportunities in 1960s-1980s buildings can deliver 15-20% returns post-renovation for investors willing to undertake improvement projects.

It's something we develop in our Australia property pack.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What Makes Kensington Unique in Sydney's Property Landscape?

Kensington's distinctive character stems from its rare combination of education infrastructure and lifestyle amenities.

The suburb hosts two major institutions - UNSW and NIDA - creating perpetual demand unlike typical residential areas. This educational backbone supports a population where 20-29 year-olds dominate demographics, ensuring consistent rental demand regardless of broader economic cycles. The 17.4% population growth between 2011-2016 significantly exceeded Sydney averages.

Physical attributes enhance investment appeal with 28.4% of the suburb dedicated to parkland across 21 parks. The heritage streetscapes featuring federation homes provide aesthetic value that newer suburbs cannot replicate. Light rail connections deliver convenient CBD access while maintaining village atmosphere.

The high unit-to-house ratio of 76% reflects modern urban density while preserving character zones. This mix attracts diverse buyers from students to established families, creating market depth that insulates against downturns.

How Does Foreign Investment Impact Kensington?

International buyer activity significantly influences Kensington's property dynamics.

Kensington ranked among Sydney's top investment suburbs in 2024, attracting substantial foreign interest. Parents of international UNSW students represent a key buyer segment, often purchasing units as accommodation investments. Asian investors particularly favor education precinct locations, viewing property as both investment and lifestyle insurance.

Foreign buyers face additional costs including surcharge stamp duty and land tax, yet remain active given Kensington's fundamentals. All purchases require Foreign Investment Review Board approval, creating administrative hurdles that filter out speculative buyers. The mix of local and international demand creates competitive conditions particularly for units under $1 million near campus.

Local investors maintain market dominance, familiar with rental dynamics and university cycles. However, foreign capital provides consistent demand support, particularly for new developments offering modern amenities attractive to international tastes.

What Infrastructure Developments Will Impact Values?

Kensington benefits from significant infrastructure supporting long-term value growth.

The established light rail network provides seamless CBD connectivity, eliminating traditional suburban transport challenges. UNSW's continued expansion including new facilities and increased enrollment capacity ensures sustained accommodation demand. The university's global ranking improvements attract quality international students willing to pay premium rents.

Planned improvements to Anzac Parade will enhance commercial amenity while maintaining residential character. The suburb's mature infrastructure including established retail, dining, and services reduces development risk compared to growth corridors. Proximity to Centennial Park and Sydney's beaches adds lifestyle value difficult to replicate.

Limited scope for major new developments due to heritage controls and established density creates natural supply constraints. This infrastructure maturity provides investment stability while education-driven demand ensures continued growth potential through market cycles.

What Risks Should Buyers Consider?

Despite strong fundamentals, Kensington presents specific investment risks requiring careful consideration.

High entry prices limit buyer pools and may impact liquidity during market downturns. The $4.2 million median house price excludes most buyers, potentially extending selling periods if conditions deteriorate. Heavy reliance on education sector creates concentration risk should university policies change or international student numbers decline significantly.

Low house rental yields at 2.04% mean negative gearing even with tax benefits, requiring sustained capital growth to justify investment. The suburb's 38.9% owner-occupier rate indicates investor dominance, potentially amplifying market volatility during sentiment shifts. Older apartment buildings may face substantial maintenance levies impacting net returns.

Regulatory changes targeting foreign investment or negative gearing could disproportionately impact Kensington given its investor profile. Rising interest rates particularly affect high-value markets where buyers typically carry larger mortgages relative to income.

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Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Kensington presents a compelling yet complex investment opportunity within Sydney's premium property market. The suburb's unique education-driven dynamics create consistent demand fundamentals that differentiate it from typical residential areas, while heritage character and lifestyle amenities attract owner-occupiers seeking long-term homes.

Success in Kensington requires matching property selection to investment objectives. Income investors should focus on units near UNSW offering 4%+ yields, growth seekers should target heritage houses despite low yields, while balanced strategies point toward two-bedroom units combining reasonable yields with appreciation potential. Understanding these nuances ensures optimal outcomes in this distinctive Sydney suburb.