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
Sydney's property market is experiencing steady growth driven by strong fundamentals including low housing supply, population growth, and declining interest rates. As of September 2025, median house prices have reached $1.53 million with modest annual growth of 2.2%, while apartments remain significantly more affordable at $868,000 with minimal price increases.
Major banks forecast continued price growth of 2.7% to 4.6% for houses and 1-3% for apartments over the next 12-24 months. The market benefits from record-low vacancy rates of 1.5%, strong auction clearance rates of 71%, and below-average property listings that continue to constrain supply and support prices.
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Sydney's property market is poised for steady but moderate growth through 2026, with houses significantly outperforming apartments in both price appreciation and market demand.
While affordability constraints limit explosive growth, the combination of population growth, infrastructure investment, and easing monetary policy supports continued price increases in Sydney's residential market.
| Market Indicator | Current Status (September 2025) | 12-Month Outlook |
|---|---|---|
| Median House Price | $1,525,956 (+2.2% annually) | 2.7% - 4.6% growth forecast |
| Median Apartment Price | $868,341 (0% - 0.3% annually) | 1% - 3% growth forecast |
| Auction Clearance Rate | 71% (well above national average) | Expected to remain strong 70%+ |
| Rental Vacancy Rate | 1.5% (historically low) | Likely to remain tight <2% |
| RBA Cash Rate | 3.60% (cut from 4.35%) | Further cuts to 3.10-3.35% |
| Population Growth | +107,500 people annually | Continued strong migration |
| Property Listings | 20% below five-year average | Supply constraints to persist |
What's the current median house price in Sydney and how has it changed over the past 12 months?
Sydney's current median house price stands at $1,525,956 as of July 2025, representing a 2.2% increase over the past 12 months.
This moderate growth reflects the market's steady recovery from earlier volatility. The price increase demonstrates resilience despite ongoing affordability constraints and higher interest rates that characterized much of the previous year.
Monthly growth has been consistent at around 0.6% throughout 2025, with quarterly growth reaching 1.8%. This represents the highest median dwelling value of all Australian capital cities, maintaining Sydney's position as the nation's most expensive property market.
The growth has been particularly driven by Western Sydney suburbs, with areas like St Marys (+7.4%), Fairfield (+7.0%), and Liverpool (+6.8%) leading price appreciation over the 12-month period.
It's something we develop in our Australia property pack.
How do Sydney's apartment prices compare to houses, and what has been the year-on-year growth rate for each?
Sydney apartments are significantly more affordable than houses, with the median apartment price at $868,341 compared to $1,525,956 for houses - a difference of approximately $658,000.
The performance gap between property types has widened dramatically. House prices have grown 2.2% annually and 3.3% year-to-date, while apartment prices have remained essentially flat with 0% to 0.3% annual growth.
This divergence has created a record-high price gap, with apartments now representing about 56% of median house values. Monthly apartment growth has been minimal at just 0.2%, compared to 0.8% monthly growth for houses.
The slower apartment market reflects broader national trends where houses consistently outpace units, though demand for apartments remains steady due to affordability constraints and rising immigration.
What's the latest forecast from CoreLogic, SQM Research, or major banks for Sydney's property prices over the next 12 to 24 months?
| Institution | House Price Forecast | Apartment Forecast |
|---|---|---|
| Westpac | +3.0% for 2025 | Moderate growth expected |
| National Australia Bank (NAB) | +2.7% for 2025 | Below house growth |
| ANZ | +4.6% for 2025 | 1-3% growth range |
| KPMG | +3.3% for 2025, +5.3% for 2026 | +4.6% for 2025, +5.5% for 2026 |
| Domain | 6-8% annualized growth | 4-6% growth range |
| CoreLogic | Steady moderate growth | Slower than houses |
| Commonwealth Bank (CBA) | Modest positive growth | Below house performance |
How many properties are currently listed for sale in Sydney, and how does that number compare to the five-year average?
Property listings in Sydney remain significantly constrained, with current stock levels running approximately 20% below the five-year average nationally.
This supply constraint continues to be one of the primary drivers supporting property prices across Sydney. Despite seasonal increases in spring listings, total available stock remains well below historical norms.
The tight supply situation is particularly pronounced for quality properties, with A-grade homes and investment-grade apartments experiencing strong demand that outstrips available inventory. Auction volumes have increased to around 720 properties per week, but this remains insufficient to meet buyer demand.
Sales volumes are running 1.9% above the five-year average, indicating that despite limited choice, buyer demand remains resilient and properties are transacting when they do come to market.
What's the current auction clearance rate in Sydney, and how does it compare to last year's clearance rate?
Sydney's auction clearance rate currently sits at 71.7% as of late August 2025, representing the strongest performance among all Australian capital cities.
This represents a significant improvement from the same period last year, when clearance rates were running in the low-to-mid 60% range. The current 71% monthly average is the highest result since February 2024.
The clearance rate has remained above the critical 70% threshold for three consecutive weeks, indicating strong buyer confidence and competitive market conditions. Both houses (78.6%) and units (80.7%) are achieving robust clearance rates.
This improvement reflects the positive impact of interest rate cuts on buyer sentiment and borrowing capacity, with Sydney historically being the most rate-sensitive market in Australia.
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What is Sydney's average rental yield for houses and apartments, and how have rents moved in dollar terms over the past 12 months?
Sydney's rental yields are among the lowest nationally due to high property purchase prices, with houses averaging 2.6% gross yield and apartments achieving approximately 3.9% to 4.2% gross yield.
| Property Type | Gross Rental Yield | Annual Rent Growth |
|---|---|---|
| Houses | 2.6% - 3.0% | +1.8% annually |
| Apartments/Units | 3.9% - 4.2% | +2.6% - 3.6% annually |
| Premium Suburbs | 2.0% - 2.5% | Strong growth in high-demand areas |
| Outer Suburbs | 4.0% - 6.3% | Consistent rental demand |
Monthly rental growth has accelerated, with July 2025 showing a 0.4% increase - the fastest monthly rise since April 2024. This indicates that rental market pressures are intensifying as vacancy rates remain at historic lows.
What's the current vacancy rate in Sydney, and how does it compare historically to the long-term average?
Sydney's rental vacancy rate currently sits at 1.5% as of September 2025, well below the balanced market range of 2-3% and significantly tighter than historical averages.
This exceptionally low vacancy rate indicates an extremely tight rental market, with demand for rental properties far exceeding available supply. The current rate represents near-historic lows and reflects the ongoing housing shortage affecting Sydney.
The tight vacancy conditions are driving rental price growth and creating intense competition among tenants. Many suburbs are reporting vacancy rates closer to 1%, particularly in areas popular with students and young professionals.
This supply-demand imbalance in the rental market provides strong support for property investors, as rental income growth and capital appreciation prospects remain favorable despite high purchase prices.
It's something we develop in our Australia property pack.
How have interest rates and borrowing costs changed in the last year, and what do RBA forecasts suggest for the next 12 months?
The RBA has cut the cash rate by 0.75 percentage points from its peak of 4.35% to the current 3.60% as of August 2025, with the most recent 0.25% cut occurring in August.
Major banks forecast further reductions over the next 12 months, with expectations that the cash rate will fall to between 3.10% and 3.35% by early 2026. Commonwealth Bank expects cuts in September and December 2025, while ANZ and NAB anticipate additional cuts extending into early 2026.
- Commonwealth Bank (CBA): Two more cuts to 3.35% by end-2025, then to 2.85% in Q1 2026
- ANZ: Cuts in September and November 2025, then Q1 2026, reaching 3.10%
- Westpac: Multiple cuts through 2026 to reach 2.85%
- National Australia Bank: Gradual easing to 3.10% through early 2026
- Market Impact: Each 0.25% cut adds $10,000-$30,000 in borrowing capacity
Lower borrowing costs are already improving buyer confidence and market activity, with Sydney being historically the most rate-sensitive property market in Australia.
How affordable is Sydney property relative to incomes—what's the house price to income ratio today compared to 5 or 10 years ago?
Sydney property affordability has deteriorated significantly, with the current house price-to-income ratio sitting at approximately 9.8 times median household income as of September 2025.
This represents a substantial increase from historical levels and positions Sydney as Australia's least affordable property market. The median household now requires more than 13 years to save a 20% deposit for a typical Sydney dwelling.
Over the past 5-10 years, the price-to-income ratio has climbed from around 8-9 times to the current elevated levels, driven by house price growth significantly outpacing wage increases. This affordability constraint acts as a natural brake on rapid price appreciation.
The affordability challenge is creating market segmentation, where first-home buyers increasingly focus on apartments or outer suburban locations, while established homeowners dominate the detached house market.
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.
How is population growth, particularly net overseas migration, influencing housing demand in Sydney, and what are the latest ABS figures?
Sydney experienced robust population growth of 107,500 people in the 2023-24 financial year according to the latest ABS data, representing the second-largest increase among Australian capital cities after Melbourne.
Net overseas migration remains the primary driver of Sydney's population expansion, with Australia recording 340,800 net overseas migrants nationally in the year ending December 2024. Sydney captures a significant portion of these new arrivals, particularly international students and skilled migrants.
Population projections indicate NSW will gain nearly 1 million additional residents by 2034, with more than 650,000 settling in Sydney. This sustained population growth creates ongoing pressure on an already undersupplied housing market.
The demographic influx includes young professionals, families, and students who require both rental and purchase accommodation, supporting demand across all property segments from apartments to family homes.
What major infrastructure projects are underway in Sydney, and how might they influence housing demand in specific suburbs?
The $10.5 billion Sydney Metro - Western Sydney Airport project represents the most significant infrastructure development, scheduled for completion in 2026 when the new international airport opens.
- Sydney Metro Western Sydney Airport: 23-kilometer line connecting St Marys to Bradfield via the new airport, supporting 14,000 construction jobs
- Western Sydney International Airport: Opening in 2026, expected to support 28,000 direct and indirect jobs by 2031
- Bradfield City Centre: New employment hub supporting 200,000 jobs in aerospace, defense, manufacturing, and logistics
- Sydney Metro West: 90% tunneling completed, connecting Parramatta to Sydney CBD in 20 minutes
- Transport Network Expansions: Future extensions planned to connect Campbelltown, Macarthur, and other growth corridors
These infrastructure investments are driving property demand in corridors like Austral, Leppington, Oran Park, and the broader Western Sydney growth areas. Suburbs near future metro stations are experiencing increased investor and owner-occupier interest.
The infrastructure rollout is creating employment hubs outside the traditional CBD, supporting population distribution and housing demand across Sydney's western regions.
What are analysts saying about risks to the Sydney property market, and how significant are those risks quantified?
Analysts identify three primary risks to Sydney's property market: potential apartment oversupply, interest rate volatility, and global economic uncertainty affecting local conditions.
| Risk Factor | Impact Level | Analyst Assessment |
|---|---|---|
| Apartment Oversupply | Moderate | Slower unit price growth expected |
| Interest Rate Sensitivity | High | Sydney most rate-sensitive market |
| Affordability Constraints | High | Natural brake on price growth |
| Global Economic Shocks | Moderate | External factors could reverse gains |
| Construction Costs | Low-Moderate | Limited new supply supports prices |
| Government Policy Changes | Moderate | Zoning reforms may increase supply |
While analysts consider these risks significant enough to potentially limit price growth, the consensus view suggests that positive fundamentals including population growth, infrastructure investment, and supply constraints will likely outweigh downside risks through 2025-2026.
It's something we develop in our Australia property pack.
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.
Sydney's property market is positioned for steady, sustainable growth through 2025 and beyond, supported by fundamental drivers including population expansion, infrastructure investment, and supply constraints.
While houses continue to outperform apartments and affordability remains challenging, the combination of easing interest rates and tight rental markets creates opportunities for both investors and homebuyers who understand market dynamics and select properties strategically.
Sources
- OpenAgent - Sydney Property Market Data, Trends and Forecasts 2025
- Property Update - Sydney Housing Market Trends & Predictions
- KPMG Australia - House prices to rise by 3.3%, units by 4.6% in 2025
- Metropole - Sydney housing market update (August 2025)
- MacroBusiness - Are Sydney house prices ready to launch?
- Your Mortgage - Median house prices around Australia: August 2025
- Australian Bureau of Statistics - Regional population, 2023-24 financial year
- Sydney Metro - Western Sydney Airport project overview
-Complete Guide to Sydney Property Buying Process
-Sydney Property Investment Guide for Foreign Buyers
-How to Invest in Sydney Real Estate Successfully
-Should You Buy Property in Sydney Right Now?
-Step-by-Step Guide: How to Buy a House in Sydney
-Sydney Property Market Outlook and Analysis
-Average Price per Square Meter in Sydney
-Average Rental Prices Across Sydney Suburbs