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
Are you considering buying property in Sydney and wondering what the market will look like in 2025? Curious about the trends that could impact your investment decisions? Want to know if now is the right time to make a move?
We will lay down recent insights, providing you with a clear picture of the future landscape. Here, no guesswork; we rely only on solid data to bring you 15 strong forecasts for Sydney's real estate market in 2025.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Australia Property Pack
1) Rental yields in high-density areas will stay stable due to strong demand
Rental yields in high-density areas like Sydney are expected to remain stable due to consistent demand.
In places like Auburn, rental yields have held steady at 6.3%, with a noticeable jump in median weekly rent by 11.5% from November to October 2024. This trend shows that high-density suburbs are in demand. Sydney's population is also on the rise, projected to grow from 4.9 million in 2021 to 6.3 million by 2041, largely due to young couples and families who love city life.
Right now, Sydney's rental market is experiencing record-low vacancy rates at 1.7%, underscoring the high demand for rentals. Millennials and Gen Z are driving this demand, drawn to urban living for its amenities, public transport, and vibrant culture. The slow pace of new housing developments means supply isn't meeting demand, keeping rental yields stable.
Job growth in central business districts is another factor, attracting more renters and boosting demand in high-density areas. With public transport improvements like the upcoming Parramatta light rail, accessibility is getting better, which in turn increases rental demand. Plus, the rising cost of owning a home in Sydney is pushing more people to rent, further stabilizing the market.
Sources: Aus Property Professionals, NSW Planning, Property Update
2) Sydney real estate prices will rise significantly due to high demand and limited supply
Sydney's outer suburbs are seeing a steady influx of nearly 2,600 new residents each week.
This surge is driven by people seeking more affordable living options and better living conditions. As more folks move in, the demand for housing in these areas is on the rise.
Big infrastructure projects, like the proposed North-South rail link in Western Sydney, are set to boost public transport and connectivity. These improvements make the suburbs more appealing to homebuyers and investors, potentially driving up property prices.
Take Kirrawee, for example. This suburb has seen a 11% rise in median house prices over the past year. It's a clear sign that outer suburbs are already experiencing moderate price growth.
As urban sprawl continues, this trend is likely to persist. The ongoing development and expansion in these areas are making them increasingly attractive for property investment.
With more people moving in and infrastructure improving, Sydney's outer suburbs are poised for continued growth in property values.
Sources: NGAA, Smart Property Investment, Broker News
Everything you need to know is included in our Property Investment Pack for Sydney
3) Sydney property prices will stabilize with rising interest rates
In recent years, interest rates in Australia have risen significantly, impacting Sydney's property market.
During 2023 and 2024, the Reserve Bank of Australia (RBA) increased rates, causing a 3-5% dip in property prices in some Sydney areas. This shows how rising interest rates can lead to price stabilization or even a decline.
CoreLogic data highlights this trend, noting that after a surge in prices from COVID-19 to early 2022, there was a 13.8% drop by early 2023. Now, prices hover just below their previous peak, suggesting a stabilization influenced by higher rates and affordability issues.
Experts like Ash Buyers Agency believe that high-interest rates will continue to stabilize prices. While confidence might return when rates drop, the current environment is expected to keep prices steady.
Another factor is the slowdown in construction, which has limited new housing supply. This means demand is focused on existing properties, further contributing to price stability.
For potential buyers, understanding these dynamics is crucial. The combination of rising interest rates and limited supply suggests that Sydney's property prices are unlikely to see rapid increases in the near future.
Sources: Kitty and Miles, Ash Buyers Agency, Property Update
4) Sydney real estate prices will rise significantly due to high demand and limited supply
Sydney's luxury property market is booming, with sales of homes over $10 million skyrocketing.
In 2023, the city saw the largest quarterly increase in super-prime property sales, even outpacing global hotspots like Los Angeles and Singapore. This surge underscores the intense demand for high-end real estate in Sydney.
The scarcity of land in prime areas is a key reason for rising prices. As infrastructure projects improve connectivity, certain suburbs are becoming more desirable, which further inflates property values. Simply put, there's not enough land to meet the growing appetite for luxury homes.
International buyers are flocking to Sydney, attracted by the weak Australian dollar and geopolitical stability. This makes Australia a safe and appealing investment, adding more fuel to the already high demand for luxury properties.
With limited supply and increasing interest from overseas, luxury property prices in Sydney are set to keep climbing. The city's allure is undeniable, and the market reflects that.
For those considering a purchase, understanding these dynamics is crucial. The combination of limited land, infrastructure improvements, and international interest creates a perfect storm for rising prices.
Sources: Forbes Global Properties, Realestate.com.au, Property Update
5) Regulations will tighten on foreign ownership and will impact demand in certain segments
In Sydney, regulations on foreign property ownership are tightening, especially in real estate.
Back in 2016, the Foreign Purchaser Duty Surcharge was introduced at 4%, and it's been climbing ever since. By 2025, this surcharge is expected to hit 9%, making it pricier for foreign investors to buy property. The New South Wales Government is pushing these increases to free up more homes for locals and ensure foreign buyers help cover infrastructure costs.
In 2023, foreign investment in Sydney's real estate was a whopping AUD 15 billion, with a big chunk from Chinese and Hong Kong buyers. But with the new rules, there's been a noticeable shift. In 2024, approved residential real estate investments dropped by 15%, and purchases by Chinese and Hong Kong buyers took a hit.
The rising costs, like the stamp duty surcharge and annual land tax surcharge, are making even wealthy foreign buyers think twice. This trend is reshaping the market, as foreign investors are now more cautious about diving into Sydney's property scene.
For those considering buying property in the country, it's crucial to understand how these changes might affect demand and pricing. With regulations tightening, the landscape is shifting, and it's essential to stay informed.
Sources: NSW Government, Unicorn Buyers Agents, Broker News
Make a profitable investment in Australia
Better information leads to better decisions. Save time and money. Download our guide.
6) Sydney real estate prices will rise significantly due to high demand and limited supply
Tax incentives for first-time buyers are set to boost demand in Sydney's affordable housing market.
In 2023, the number of new owner-occupier first home buyer loan commitments in Sydney rose by 15.8%, showing a clear interest from first-time buyers. This surge is largely thanks to the NSW Government's First Home Buyer Assistance Scheme (FHBAS), which saw 18,700 new homeowners claiming stamp duty grants after its expansion. The scheme's expansion allowed an additional 13,800 buyers to avoid hefty stamp duties, making home ownership more affordable.
Moreover, 4,600 buyers benefited from stamp duty discounts on homes and lands priced between $800,000 and $1 million. These financial breaks are making it easier for first-time buyers to enter the market, increasing demand for affordable housing. Government reports have highlighted the effectiveness of these tax incentives, with the Home Guarantee Scheme (HGS) supporting around 41,700 Australians into home ownership in 2022-23.
Nearly two-thirds of all available Scheme places were taken up, indicating a high demand for first-home buyer assistance programs. These programs are crucial in supporting first-time buyers in Sydney. In other regions, similar schemes have shown positive results. For instance, Queensland's First Home Buyer Grant was doubled to $30,000, likely boosting demand in their affordable housing market.
This suggests that tax incentives can effectively increase demand in Sydney as well. The trend is clear: when financial barriers are lowered, more people are eager to step onto the property ladder. With these incentives, Sydney's affordable housing market is poised for growth, attracting more first-time buyers eager to make their homeownership dreams a reality.
Sources: InfoChoice, Housing Australia, Kitty and Miles, ABS
7) Sydney real estate prices will rise significantly due to high demand and limited supply
Sydney is seeing a boom in single-person households, especially in the city center.
In 2021, 41.1% of households in the City of Sydney were made up of just one person, compared to only 23.2% in Greater Sydney. This shift suggests that more people are looking for living spaces that offer a sense of community and shared amenities, like co-living spaces.
Young professionals are flocking to urban areas, and in 2020, Savills noted that 1.46 million people aged 25-34 were renting across Australia, with many settling in cities. This group finds co-living appealing because it offers both flexibility and affordability, fitting perfectly with their lifestyle.
Affordable housing is becoming scarce, and by 2024, JLL Insights predicted a critical housing shortage in Sydney. This shortage, along with favorable planning conditions, has spurred investment in co-living spaces, making them one of the few actively developing real estate sectors in the city.
Sky-high property prices are pushing people away from traditional home ownership in Sydney. Many are turning to co-living as a more affordable and flexible option. The rise of remote work has also increased the demand for these flexible living solutions, especially among millennials and Gen Z, who appreciate the convenience and community that co-living offers.
Sources: Savills Australia, City of Sydney Community Profile, JLL Insights
8) Community-oriented living will drive interest in mixed-use developments in Sydney
The buzz around community-oriented living is really driving interest in mixed-use developments in Sydney.
In 2023, Sydney saw a whopping 90,141 square meters of mixed-use spaces added to the market, and there's even more coming in 2024. These developments are all about blending residential, commercial, and recreational spaces, creating lively spots where you can live, work, and hang out without going far.
Sydney's population is booming, especially with 634,500 new residents in 2023, many of whom are young professionals and families. They're drawn to the convenience and community vibe that mixed-use developments offer. This shift is in line with the growing demand for places that encourage social connections, as seen in reports on Sydney’s CBD.
The government is on board too, pushing for sustainable and integrated urban development. They're backing initiatives to revitalize the CBD and boost community living, which is great news for mixed-use projects. A standout example is the mixed-use project in Castle Hill, which shows how these spaces can become vibrant community hubs.
These developments are not just about convenience; they're about creating a sense of belonging. People want to be part of a community where everything is within reach, from cafes to parks, making life easier and more enjoyable.
With the city's growth and government support, mixed-use developments are set to become even more popular. They offer a lifestyle that combines the best of urban living with a strong community feel, making them a top choice for many.
Sources: NSW Planning, Property Council of Australia, Business NSW
Everything you need to know is included in our Real Estate Pack for Sydney
9) Sydney's waterfront properties will attract strong interest for their unique lifestyle offerings
Sydney's waterfront properties are a hot commodity, thanks to their unique lifestyle offerings.
In 2023, these properties commanded a 118% premium, a slight dip from 121% in 2022, but still a hefty value compared to other cities. This premium is more than double that of Auckland, which ranks second at 58%. The allure of waterfront living, with its luxury and lifestyle appeal, is a major draw for buyers. Many are attracted to the idea of having private maritime facilities, especially expats who find themselves priced out of high-end markets in cities like London and New York.
The tight supply and demand dynamics in Sydney play a big role in maintaining these high premiums. Experts note that the limited availability of waterfront properties keeps interest high. The media often highlights the unique lifestyle advantages of these homes, such as private access and stunning water views, which only adds to their appeal.
New developments and infrastructure improvements in waterfront areas, like those on the Central Coast, are also enhancing the attractiveness of these locations. These improvements make the areas more desirable for both local and international buyers. The combination of lifestyle benefits and investment potential makes Sydney's waterfront properties a sought-after choice.
For those considering a purchase, it's worth noting that the demand for these properties is driven by a strong preference for luxury and lifestyle. The allure of waterfront living, with its access to private maritime facilities, is particularly attractive to expats. The tight supply and demand dynamics in Sydney further contribute to the high premiums and interest in these properties.
Sources: Knight Frank’s 2023 Waterfront Homes Report, The McGrath Report 2025
10) Eco-friendly homes will dominate as Sydney residents become more environmentally conscious
In Sydney, eco-friendly homes are gaining popularity as people become more environmentally conscious.
Back in 2023 and 2024, there was a noticeable uptick in Green Star certifications, which are awards for buildings meeting high environmental standards. This trend indicates a growing interest in sustainable building practices. Builders are increasingly turning to platforms like Superyard, which make it easier to find sustainable materials, reducing waste and promoting eco-friendly construction.
Real estate listings are now highlighting features like solar panels and double-glazed windows, which are becoming hot commodities among buyers. This shift is partly due to government incentives, such as the new minimum 7-star energy rating for homes introduced in October 2023. This policy encourages builders to incorporate energy-saving features, making these homes more appealing to cost-conscious buyers.
The media's focus on climate change and sustainable living has also played a role in raising public awareness. This has led to a cultural shift towards sustainability, with more educational programs promoting environmental consciousness. As a result, there's a growing demand for eco-friendly homes in Sydney.
These homes not only help reduce environmental impact but also offer financial benefits. Owners of green homes often find themselves financially better off from day one, thanks to lower energy costs and government incentives. This financial advantage is a significant draw for potential buyers.
As Sydney residents become more environmentally aware, the demand for eco-friendly homes is expected to continue rising. This trend is likely to shape the future of the real estate market in the city, with sustainability becoming a key factor in property decisions.
Sources: GBCA Media Releases, Superyard, GBCA Media Releases, QBE Housing Outlook
11) Sydney real estate prices will rise significantly due to high demand and limited supply
Sydney residents are increasingly drawn to properties with outdoor spaces.
In the real estate market, listings now often highlight homes with gardens or balconies, reflecting this growing interest. Suburbs like Springwood, Minto, and Winmalee are experiencing price growth due to their affordability and the availability of outdoor spaces. These areas offer a blend of suburban charm and the outdoor lifestyle that many are seeking.
The COVID-19 pandemic made many Australians realize the importance of green spaces for exercise, connection, and solace. During this time, surveys showed that 86% of people valued green spaces in their cities, whether it was a small laneway with pot plants or a rooftop garden. This shift in perspective has led to a greater emphasis on creating and enhancing outdoor living spaces, as people seek to bring nature closer to home.
CoreLogic’s research highlights a positive correlation between property values and green space in Greater Sydney. In the densely populated Eastern suburbs, private green spaces have been linked to housing price premiums. This means that homes with outdoor areas are not only desirable but also financially beneficial, offering a significant return on investment.
As lifestyle preferences evolve, Sydney residents are prioritizing properties with outdoor spaces. This trend is particularly notable in areas where green spaces are scarce, driving up demand and prices for homes that offer a slice of nature. The desire for outdoor living is reshaping the real estate landscape, making these properties a hot commodity.
For those considering a move, understanding the value of outdoor spaces can be crucial. Whether it's a garden, a balcony, or a shared courtyard, these features are becoming essential for many buyers. As the market adapts, properties with outdoor spaces are likely to remain in high demand, reflecting a broader shift towards a lifestyle that embraces the outdoors.
Sources: Hockeys, Property Council
Get fresh and reliable information about the market in Australia
Don't base significant investment decisions on outdated data. Get updated and accurate information with our guide.
12) Stricter environmental regulations will raise new development costs in Sydney
Stricter environmental regulations in Sydney are set to make new property developments more expensive.
One big reason is the need to comply with green building standards. The National Construction Code has been updated to boost energy efficiency, but this comes with a price tag. On average, it adds about $4,300 to the cost of building a home. While you might save on energy bills in the long run, the upfront costs are definitely higher.
Then there's the issue of sustainable construction materials. As more people want eco-friendly options, the demand is pushing prices up. Supply chain issues and production costs are also playing a part, making it pricier to get these materials. This is a common trend in the construction world and it bumps up the overall cost of projects.
Don't forget about the environmental impact assessments (EIAs). These are crucial, especially for big projects, but they don't come cheap. Depending on how large and complex the project is, these assessments can run into the hundreds of thousands, or even over a million dollars. It's another hefty expense that developers have to consider.
Sources: Green Building Council of Australia, Environmental Impact Assessment in NSW
13) Sydney real estate prices will rise significantly due to high demand and limited supply
The Hills District is a top choice for families, and it's easy to see why.
One major reason is the area's outstanding schools. Back in 2023 and 2024, schools here consistently ranked high in educational performance reports, like the NAPLAN tests, which measure student performance in literacy and numeracy. This strong academic reputation is a big draw for families who prioritize education for their children.
Moreover, the district has seen increasing enrollment numbers in local schools, indicating a growing interest from families. Demographic statistics show that the number of families with children in the area is higher than the Sydney average. Families are clearly choosing The Hills District as their home, and this is reflected in the rising property values, with suburbs like Winston Hills experiencing significant growth in house prices.
In addition to excellent schools, The Hills District offers a wealth of community amenities that enhance its appeal. The area is equipped with numerous parks and sports facilities, providing ample opportunities for outdoor activities and family fun. Shopping centers, such as those in Castle Hill, have undergone major redevelopment, offering a convenient and accessible environment for daily needs.
These amenities contribute to high satisfaction rates among families living in the district, as shown in various surveys. The combination of top-notch schools and community facilities makes The Hills District a highly desirable place to live.
Sources: McCrindle Research on Sydney's Population Growth, West Goshen Community Park, Savings.com.au on Sydney Suburbs to Watch
14) Sydney's CBD will see a drop in residential demand as remote work increases
Sydney's CBD is experiencing a noticeable shift as more people embrace remote work.
With 19 out of the 25 largest tenants reducing their office space since 2020, the city is seeing a change in how businesses operate. This trend is part of a larger movement where companies are rethinking their need for physical office spaces. As a result, fewer people are commuting to the CBD daily, leading to a transformation in the urban landscape.
As remote work becomes more common, there's a growing trend of people moving away from the CBD. Suburban and regional areas around Sydney are becoming more attractive due to rising property prices driven by demand and affordability. People are looking for homes that offer more space and the comfort to work remotely. This has led to an increase in investment in home office setups, with many seeking properties that have dedicated office spaces and access to recreational amenities.
The office market in Sydney's CBD is also feeling the impact, with vacancy rates climbing from 10.1% to 11.3%. This rise in vacancies indicates a drop in demand for office space, which could also suggest a decline in residential demand in the CBD. Many families are opting for suburban living, seeking a better work-life balance and more spacious environments.
Media reports and anecdotal evidence support this lifestyle shift, highlighting a trend towards suburban living as people prioritize space and comfort over proximity to the city center. The desire for a better quality of life is driving this movement, as more individuals and families choose to relocate from the bustling CBD to quieter, more spacious areas.
Sources: Property Council, Tenant CS, Hockeys
Everything you need to know is included in our Property Pack for Sydney
15) Green spaces and parks will drive property desirability in Sydney
Properties near parks and green spaces in Sydney are becoming increasingly desirable.
In the Eastern Suburbs, areas like Bellevue Hill and Vaucluse are prime examples, with Bellevue Hill's property value jumping by over a million dollars in just one year. This surge highlights how much people value proximity to nature. It's not just about the view; it's about the lifestyle and the sense of community these green spaces foster.
CoreLogic research underscores this trend, showing a strong link between property values and access to green spaces in Greater Sydney. In crowded neighborhoods, having a slice of nature nearby can significantly boost house and unit prices. People are willing to pay a premium for that breath of fresh air and the tranquility that comes with it.
Urban planning is catching on, with initiatives like the Blue Green Grid focusing on developing and protecting green spaces. These projects are backed by government policies that aim to expand parks and increase the tree canopy across the city. It's a win-win: enhancing the urban environment while making properties more appealing to potential buyers.
As Sydney continues to grow, green spaces and parks are set to become key factors in property desirability. Buyers are increasingly looking for homes that offer not just a place to live, but a lifestyle that includes easy access to nature. This shift is reshaping the real estate landscape, making green spaces a top priority for both developers and homebuyers.
In the future, we can expect more urban developments to incorporate green spaces as a central feature. This trend is not just about aesthetics; it's about creating sustainable, livable communities that prioritize residents' well-being. As a result, properties near these green havens are likely to see continued growth in value.
Sources: Property Update, Property Council, TEC
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.