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 is happening in Sydney’s real estate market? Are prices on the rise or decline? Is the city still a prime destination for international investors? How are local government policies and taxes shaping the real estate landscape in 2025?
These are the questions we hear every day from professionals, buyers, and sellers across Sydney and beyond. Maybe you’re curious about the same things.
We know this because we stay closely connected with local experts and people like you, exploring the Sydney real estate market daily. That’s why we crafted this article: to offer clear answers, insightful analysis, and a comprehensive view of market trends and dynamics.
Our aim is straightforward: to make sure you feel informed and confident about the market without needing to search elsewhere. If you think we missed something or could improve, we’d love to hear your feedback. Feel free to message us with your thoughts, and we’ll strive to enhance this content for you.
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1) Chinese investors will keep targeting Sydney’s real estate market, especially new developments
Chinese investors are keen on Sydney's real estate market, especially new developments.
In the July–September 2023 quarter, they poured a hefty $700 million into Australian residential properties, underscoring their major influence. This isn't just a one-off; it's part of a larger trend where foreign buyers are snapping up properties in Sydney.
Foreign buyers make up about 10 to 15 percent of new housing sales in Sydney. When it comes to new apartments, this figure jumps to 25 percent. For off-the-plan apartments, foreign investors can account for up to 50 percent of sales, showing a clear preference for new developments.
Even with restrictions on capital outflows from China, wealthy Chinese families are still investing heavily in international real estate. They favor stable and developed markets like Australia, which was the top overseas destination for Chinese property seekers in the first half of 2023.
This trend is expected to continue, with a significant number of people predicted to move from China to Australia between 2023 and 2025. Australia's appeal lies in its stability and development, making it a prime choice for Chinese investors looking to secure their assets.
Sources: Prime Capital, Hoole, East West Property
2) Sydney’s property prices will stabilize as rising interest rates cool the market
In Sydney, rising interest rates have been cooling the property market.
Back in 2023, when interest rates shot up, Sydney's house prices took a noticeable dip. Although they bounced back close to their peak, by the end of 2024, the growth had slowed significantly. This was a clear sign that the market was adjusting to the new financial climate.
By November 2024, the median house price in Sydney had dropped by 0.4%, showing a steady cooling trend. This shift pushed quarterly gains into the negative, even though the annual change in property prices was still positive at 3.3%. It was evident that while prices were still on the rise, the pace was much slower.
Consumer surveys from 2024 revealed that the market was cooling as interest rates climbed, with both buyers and sellers becoming more cautious. The Reserve Bank of Australia had set rates at 4.35%, creating a challenging environment for buyers and homeowners. This high-rate scenario was causing some stress, but financial experts didn't expect any more rate hikes.
In fact, there was talk of potential rate cuts in the first half of 2025, which could bring some relief. This anticipation was based on the belief that the market needed a breather after the rapid rate increases. Buyers and sellers were watching closely, hoping for a more stable market environment.
Sources: OpenAgent, API Magazine, Property Update
We made this infographic to show you how property prices in Australia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
3) Affordable housing initiatives will help keep price increases moderate in certain areas
Affordable housing initiatives are gaining momentum with increased government funding.
In 2023 and 2024, the Australian Government has allocated a hefty $1.9 billion for state affordable housing services. This funding is a game-changer, as it helps build more affordable homes, easing the pressure on housing prices in certain areas. Imagine more homes popping up, making it less of a scramble to find a place.
Take New South Wales, for example. The government has committed over $1 billion to the Social and Affordable Housing Fund. This isn't just about numbers; it's about creating new dwellings, both social and affordable. By boosting the supply of affordable housing, these initiatives aim to balance the demand and supply in the housing market, which is crucial for keeping prices in check.
There's also a noticeable uptick in the construction of new affordable housing units. The NSW Social Housing Accelerator is a prime example, planning to deliver hundreds of new dwellings by 2026. This means more options for people, which can help stabilize local property prices. When there are more homes available, prices are less likely to skyrocket due to limited availability.
These efforts are not just about numbers and buildings; they're about creating a more balanced housing market. With more affordable homes, the pressure on prices can ease, making it a bit easier for potential buyers. It's like having more seats at a concert—less competition means less stress and more choice.
Sources: Treasury NSW, Australian Government Budget, State of the Housing System 2024
4) Rental prices in high-demand areas will rise due to limited supply and strong demand
In 2023 and 2024, Sydney's rental market has seen dramatic shifts.
High-demand areas like the Eastern Suburbs and Vaucluse are experiencing a rental boom. In Vaucluse, for instance, the median weekly rent hit $2,588, making it the priciest suburb in Australia. This surge is largely due to low vacancy rates in these sought-after neighborhoods.
Sydney's rental scene is in a bit of a crisis, with a severe shortage of available properties. This scarcity has pushed rents up citywide. By the September quarter of 2024, house rents reached a record $775 per week, reflecting the intense competition for homes.
Adding fuel to the fire, Sydney continues to draw in new residents. Even though net overseas migration dipped to 446,000 in 2023-24, the city remains a magnet for newcomers. The influx, especially of temporary student arrivals, has further cranked up the demand for housing.
For those eyeing a property investment, it's crucial to know that high-demand areas will see rental prices increase due to limited supply and strong demand. This trend is particularly evident in places like the Eastern Suburbs, where the rental market is fiercely competitive.
Sources: Property Update, Sydney Realtor, Australian Bureau of Statistics
5) Sydney's rental yields will rise as demand for rental properties exceeds supply
In 2023 and 2024, rental prices in Sydney soared, with house rents hitting a record $1,040.30 per week.
What's driving this surge? Well, rents jumped by 3.3% over the past year, showing just how much people are clamoring for rental homes. Sydney's rental market is feeling the squeeze with ultra-low vacancy rates, thanks to a mix of high immigration and not enough new homes being built.
On average, renting a place in Sydney costs about $726 per week. If you're eyeing suburbs like Vaucluse, be prepared to pay top dollar, as these areas are among the priciest, underscoring the intense pressure on rental availability.
Looking ahead, Greater Sydney's population is expected to swell by 1.4 million by 2041, mainly due to net migration. This influx is a big deal because it means more people are competing for the same number of homes, pushing rents even higher.
With more folks moving in and not enough places to live, it's no wonder rental values are climbing. The demand for housing is outstripping supply, and that's a trend that's likely to continue.
Sources: Property Update, NSW Department of Planning
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7) Green spaces and parks will increasingly influence property demand as they become more important to buyers
In 2023 and 2024, green spaces and parks have become a top priority for property buyers.
People are increasingly aware of the health perks of living near green areas. Imagine waking up to the sound of birds instead of traffic; it's a lifestyle choice that's catching on. Studies highlight that being close to parks can boost both mental and physical health, a factor more buyers are weighing when picking a home.
Interestingly, homes near green spaces often come with a higher price tag. CoreLogic's research in Sydney's bustling Eastern Suburbs and Inner City shows a clear link between property prices and park access. So, if you're eyeing a place near a park, it might be a smart investment.
Urban planners are catching on too, with policies now focusing on creating more green spaces. Take Sydney's Blue Green Grid plan, for example. It's all about protecting and expanding these natural areas. This government commitment not only makes properties near parks more appealing but also assures buyers that these spaces will stick around and even grow.
For those considering a move, this trend means that green spaces are not just a nice-to-have; they're becoming essential. As cities grow, the demand for homes near parks is likely to rise, making them a hot commodity.
So, if you're in the market, keep an eye on properties with easy access to parks. They offer more than just a pretty view; they promise a healthier lifestyle and a potentially better return on investment.
Sources: CoreLogic, Property Council, Total Environment Centre
9) Luxury properties in prime locations will see price increases as foreign buyers focus on these areas
Foreign buyers are zeroing in on luxury properties in prime spots, pushing prices up.
In 2023, foreign investment approvals for Australian residential real estate hit AUD 15 billion, with a big chunk going to Sydney. This cash flow is mainly targeting high-end properties, as overseas investors poured $5.3 billion into Australian real estate, focusing heavily on Sydney's luxury market.
During the second quarter of 2023, Sydney experienced a boom in super-prime property sales, with 38 sales over $10 million. Over the year ending March 31, 2023, Sydney was ninth globally for super-prime sales, with 76 transactions totaling $1.23 billion. The average price tag? A cool $16.2 million, showing just how hot the demand is in these prime areas.
Real estate agencies in Sydney are buzzing with international interest, especially for luxury homes. Properstar lists 219 luxury houses for sale in Sydney, underscoring a thriving market for high-end properties. The Federal Treasury's data reveals that international buyers are snapping up higher-end homes in posh suburbs like Bellevue Hill and Bondi Beach, further inflating prices.
Sources: Unicorn Buyers Agents, Forbes Global Properties, Properstar, Ambyy
10) New zoning laws will boost high-density developments in some areas, affecting property values
Sydney's zoning laws are changing, especially in suburbs like Bankstown, The Bays, and Crows Nest.
These areas are part of a plan to build up to 45,000 new homes by 2024, focusing on spots near transport hubs. This means more people can live close to work, making commuting easier and potentially boosting the local economy.
Take Crows Nest, for example. Here, the land is now set for buildings as tall as 62 storeys, paving the way for nearly 5,900 new homes and about 2,500 jobs. This kind of development is expected to draw in more residents and businesses, which could push property values up as demand and infrastructure improve.
Looking at other cities like Melbourne, we see that rezoning can really hike up property values. A site there went from being worth $120 million to $400 million after a zoning change. This trend suggests that Sydney might see similar boosts in property values as more homes are built.
For those considering buying property, these zoning changes could mean a good investment opportunity. As more people flock to these newly developed areas, the demand for housing is likely to rise, potentially increasing property values.
Keep an eye on these developments, as they could shape the future of Sydney's real estate market, making it a hot spot for both living and investing.
Sources: Smart Property Investment, Your Say North Sydney, Reserve Bank of Australia
11) Interest in large family homes will decline as people choose smaller, more manageable properties
In Sydney, property prices have skyrocketed, making large family homes a luxury few can afford.
With the median house price hitting $1.6 million, many are rethinking their options and leaning towards smaller, more budget-friendly homes. This shift is partly due to a demographic change where smaller households are becoming the norm. New South Wales is seeing a population boom, thanks to immigration, but the number of new homes isn't keeping up.
Baby Boomers are also playing a role in this trend. Many are choosing to downsize, not just for a simpler lifestyle, but also to help their kids buy homes. This means more people are looking for smaller properties that are easier to manage.
Another reason for the shift is the high maintenance costs of larger homes. In a city like Sydney, where housing is in short supply, keeping up with the expenses of a big house can be daunting. Smaller homes, on the other hand, are not only cheaper to buy but also easier on the wallet when it comes to upkeep.
In essence, the appeal of smaller homes is growing as they offer a more practical and affordable solution for many. The trend is clear: smaller, manageable properties are becoming the go-to choice for a lot of buyers.
Sources: Property Update, Domain News, The McGrath Report 2025
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12) Townhouses will become more popular for their balance of space and affordability
In Sydney, townhouses are gaining popularity as a smart choice for homebuyers.
With property prices in Sydney soaring by 28% since 2019, many find standalone houses out of reach. This has led to a surge in demand for medium-density housing, like townhouses, which offer a sweet spot between space and affordability. In 2024, the Sydney unit market outperformed the house market, showing a clear shift towards these more budget-friendly options.
Urban planning is also nudging this trend along. The NSW Department of Planning is pushing for higher density living in prime areas, which means more townhouses are popping up. This fits perfectly with what buyers want: affordable homes with some outdoor space.
Another reason townhouses are appealing is their lower maintenance costs. Unlike standalone homes, townhouses often come with shared responsibilities and fees for exterior upkeep, making them a cost-effective choice. This is especially attractive for those who want to cut down on maintenance hassles.
Demographic changes are playing a part too. With more people living in smaller households, townhouses are ideal for individuals and small families. They offer more room than apartments but without the hefty price tag of a standalone house.
So, if you're looking for a home that balances space and cost, townhouses might just be the perfect fit. They offer a practical solution for modern living, especially in a city where property prices are on the rise.
Sources: Urban.com.au, NSW Planning, MJS Construction Group
15) Luxury property prices will keep rising as wealthy individuals seek exclusive locations
Luxury property prices in Sydney are on the rise as wealthy individuals hunt for exclusive spots.
There's been a noticeable uptick in the number of high-net-worth individuals, both globally and in Australia. In 2024, Australia saw an 8.7% increase in these wealthy individuals, who now control a whopping $3.3 trillion in assets. This surge in wealth means more people are eyeing luxury properties, naturally driving up demand and prices.
Sydney's prime locations are hot commodities right now. Over the past year, home prices in Sydney have jumped by 4.5%, hitting new highs. High auction clearance rates show that buyers are keen, and with limited land available in Sydney's exclusive suburbs, the demand is only getting stronger. The slowdown in construction isn't helping, as it keeps the housing supply tight.
International buyers are also joining the fray, eager to snag prestigious Sydney addresses. The personal luxury market is thriving, thanks in part to tourism spending and the steady interest from affluent international buyers. This added international demand is another reason why prices are climbing.
Sources: Morningstar, Property Update, Burberry Annual Report
16) Sydney's metro expansion will boost property values in newly connected areas
The expansion of Sydney's metro network is expected to boost property values in newly connected areas.
In the past decade, suburbs along Sydney's metro line have seen a 49% increase in capital value, outpacing non-metro suburbs by about 5%. Take Castle Hill, for instance, which enjoyed a 72% capital growth over the decade leading up to 2023, far surpassing nearby areas like Baulkham Hills. This trend indicates that newly connected metro areas could experience similar growth.
Experts from the Property Council of Australia view the metro expansion as a major catalyst for sustainable growth in Sydney. They point out that rezoning and infrastructure development around metro lines have spurred demand and increased property values. Surveys reveal that homebuyers often prioritize being close to metro stations, which heightens interest in properties near new lines.
For those considering buying property, it's worth noting that areas newly linked to the metro are likely to become more desirable. The convenience of metro access is a significant draw for potential buyers, making these areas attractive investments. As the metro network expands, expect to see a ripple effect on property values in these newly connected suburbs.
Investors and homebuyers alike should keep an eye on these developments, as the metro expansion could lead to lucrative opportunities. The increased connectivity not only enhances the appeal of these areas but also promises long-term growth potential. With the metro network set to grow, the property market in these regions is poised for exciting changes.
Sources: Domain News, Real Estate Business
18) Buyers will increasingly prioritize sustainability, boosting demand for eco-friendly homes
In recent years, there's been a noticeable shift towards sustainable living in the housing market.
Back in 2023 and 2024, interest in eco-friendly homes surged across Australia, especially in Sydney. The National Association of REALTORS' 2024 Sustainability Report highlighted that nearly half of the respondents noticed their clients were keen on sustainability. This reflects a broader societal move towards eco-conscious living.
Green building certifications are on the rise, with the Green Building Council of Australia reporting over 800 Green Star certifications in the 2022-23 financial year. This 80% increase from the previous year shows a growing demand for sustainable homes, particularly in Sydney. Many real estate listings now include green data fields to showcase eco-friendly features.
The media has played a big role in raising awareness about climate change, which has driven consumer demand for sustainable homes. Government incentives for energy-efficient upgrades have also encouraged more people to consider eco-friendly options. Stricter building codes focusing on sustainability are pushing the industry towards more sustainable practices, making these homes more appealing.
Sources: GBCA Media Releases, NAR Sustainability Survey, GBCA Report
19) Virtual reality tours will increasingly transform property marketing and sales
Virtual reality tours are reshaping how we explore real estate.
Since 2023, VR technology has become more accessible and affordable, making it a popular tool for real estate agents. This shift is part of a larger trend, with the global VR market experiencing a rapid annual growth rate of 27.5% through 2030. As a result, more agents are using VR to showcase properties, offering potential buyers a more immersive experience.
Previously, over 130,000 real estate agents were already using VR to show homes, and this number continues to rise. Homebuyers are increasingly drawn to virtual tours, with 67% preferring listings that include them. This preference is evident in the engagement metrics, as listings with virtual tours receive 87% more views and keep potential buyers engaged for longer periods.
The COVID-19 pandemic played a significant role in accelerating the adoption of virtual solutions in real estate. Many agents and property owners turned to virtual tours as a practical alternative to in-person showings. The convenience and thoroughness of virtual tours have made them a favored option for both buyers and sellers, offering a comprehensive view of properties without the need for physical visits.
Virtual reality tours are not just a temporary trend; they are becoming a staple in the real estate industry. As technology continues to advance, we can expect virtual tours to become even more sophisticated, providing an even more realistic and detailed view of properties. This evolution will likely change how properties are marketed and sold, making virtual tours a standard part of the home-buying process.
Sources: Business Insider, PhotoUp, Beepo
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.