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
What will happen in Sydney’s real estate market? Will prices go up or down? Is Sydney still a hotspot for foreign investors? How is Australia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with real estate agents, property developers, and clients who buy properties in Sydney, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Rental yields in high-density areas will stay steady because demand is consistent
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) Property prices in Sydney's outer suburbs will grow moderately as urban sprawl expands
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
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Australia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
3) Sydney's property prices will level off as interest rates increase
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) Luxury property prices in Sydney will keep rising because demand is high and supply is limited
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) Stricter foreign ownership rules will reduce demand in certain market 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
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7) Demand for co-living spaces in Sydney will grow as more singles and young professionals seek housing options
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) Interest in mixed-use developments in Sydney will grow as people seek community-oriented living
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
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.
12) New development costs in Sydney will rise due to stricter environmental regulations
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) Families will keep moving to The Hills District for its schools and community amenities
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) Residential demand in Sydney's CBD will drop as remote work becomes more common
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
We have made this infographic to give you a quick and clear snapshot of the property market in Australia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.