The Sydney property market continues to defy expectations, with the median price for all capital city dwellings now standing at $1,203,395 – a 1.1% increase year-on-year. Despite recent challenges, Sydney house prices have surged an impressive 27.7% since the onset of COVID-19, demonstrating remarkable resilience in the face of economic uncertainty.
House prices in Sydney currently show stronger growth than units, with the median price for capital city houses reaching $1,486,373, reflecting a 1.6% year-on-year increase. The property market in Sydney faces significant supply constraints, evidenced by dwelling approvals in NSW falling 18.8% in June 2024. Furthermore, the city’s population is expected to grow by over 650,000 residents by 2034, consequently intensifying demand pressures. This demographic shift has already impacted the Sydney property market news cycle, particularly regarding the rental sector, where vacancy rates sit at just 1.7% – significantly below the 2.5% considered a balanced market.
Sydney Property Market Trends in 2025
The Sydney property market has gained renewed momentum in 2025. April recorded positive growth for the third consecutive month, with dwelling values increasing by 0.2%, bringing quarterly gains to 1.0% and annual growth to 0.9%. This upward trajectory has pushed the median dwelling value to AUD 1,826,698.39, reflecting a sustained recovery pattern.
Sydney House Prices vs Unit Prices: CoreLogic Data
A notable divergence between house and unit performance continues to characterise the Sydney property market in 2025. According to CoreLogic data, house values rose by 0.4% in April, bringing the median house value to AUD 2,252,727.06. In contrast, the unit market eased by 0.4%, with the median unit value settling at AUD 1,307,237.72.
This pattern is particularly pronounced in Sydney’s quarterly figures, where house values increased by 1.4% while unit values fell by 0.3% over the same period. The gap between house and unit prices has expanded dramatically since the pandemic began, with Sydney experiencing the most significant increase in the housing premium among all capital cities.
KPMG’s latest property report forecasts Sydney house prices to rise by 3.3% over the next 12 months, while unit prices are expected to grow more strongly at 5%. This shift reflects growing affordability constraints pushing more buyers toward the unit market as a more accessible entry point.
Auction Clearance Rates and Market Confidence
Auction clearance rates serve as a vital indicator of market sentiment in Sydney. After falling in late 2024, clearance rates have shown signs of recovery in 2025. The preliminary auction clearance rate strengthened to 70.7% in one week of May, the highest result in six weeks, and the first time it has exceeded 70% since February.
However, auction volumes have fluctuated, with Sydney hosting 558 auctions in one week of May, representing a 23% decrease compared to the same period last year. Market analysts noted that many vendors appeared to be holding out for the RBA’s interest rate decisions, with auction volumes projected to increase by 29% following the May rate cut.
Ben Collier from The Agency has observed a changing market mood in Sydney’s eastern suburbs: “After a long period of flatness, the mood in Sydney’s eastern suburbs property market is beginning to become more urgent”. This sentiment shift, coupled with the positive impact of two rate cuts by June 2025, suggests growing market confidence for the remainder of the year.
Population Growth and Housing Demand Outlook
Population dynamics remain a fundamental driver of Sydney’s property landscape, with demographic shifts poised to reshape housing demand patterns throughout the coming decade. Understanding these trends offers critical insights for property investors, developers, and policymakers alike.
NSW Population Projections to 2034
NSW’s population growth trajectory points toward substantial expansion, with projections indicating property market Sydney will reach 10.07 million residents by 2041. This represents an annual growth rate of approximately 1%, adding approximately 1.97 million people over two decades. Importantly, Greater Sydney is expected to absorb the majority of this growth, with its population increasing by 1.4 million to reach 6.3 million by 2041. By that time, Sydney will be home to 63% of NSW residents, reinforcing its position as the state’s dominant population centre.
Migration and Overseas Student Impact on Housing
Net migration stands as the primary engine of population change throughout NSW. Forecasts indicate a net gain of 1.7 million people from overseas will significantly outweigh the projected net loss of 400,000 people moving interstate. Nevertheless, since the onset of the pandemic in 2020, net overseas migration has averaged about 65,000 annually, slightly lower than pre-pandemic levels.
The relationship between migration and housing pressures appears complex. AMP chief economist Dr Shane Oliver notes that without the recent population surge, “we would probably be seeing lower prices” for the Sydney property market. Yet during the pandemic, when borders closed and net overseas migration turned negative, house prices paradoxically rose by 20% in just 18 months.
International students represent a significant segment of overseas arrivals. Research indicates these students occupy approximately 7% of rental properties nationwide, though only 11-15% of international students in Sydney reportedly seek private rentals. Many opt for purpose-built student accommodation due to competitive disadvantages in the private rental market, including a lack of rental history and credit.
Rental Market Pressure from New Residents
The rental market shows tentative signs of easing in 2025. The national vacancy rate increased to 1.3% in April – up from 1.1% in March. In Sydney specifically, the vacancy rate rose to 1.5% from 1.2% a year earlier, with available properties increasing by 20.8% to 10,784 units. These figures suggest renters may have somewhat increased negotiating power compared to recent years.
Despite this modest improvement, Sydney’s weekly advertised rent remains high at AUD 1304.23, though showing no change between March and April 2025. Over the past 12 months, national rents have risen by 3.9%, marking a slowdown from previous years.
The chronic shortage of housing existed before the recent population boom, with Sydney’s housing market estimated to be under-supplied by 70,000 to 80,000 dwellings. Further exacerbating this situation, residential building approvals continue to lag despite high property prices and rising rents. As Reserve Bank assistant governor Sarah Hunter recently noted, multiple challenges, especially high construction prices, have created “a perfect storm of constraints” on new development.
Top Performing Property Types and Suburbs
Investment preferences in the Sydney property market continue to evolve, with specific property types and suburbs demonstrating remarkable resilience despite broader market fluctuations.
Family Homes in Eastern Suburbs: Randwick, Coogee, Maroubra
The ongoing preference for space in Sydney’s housing market, particularly among families, maintains a strong demand for quality houses in Sydney’s eastern suburbs. Randwick has emerged as a standout performer, with house values increasing by 8.1% over the past 12 months. This growth is supported by the suburb’s proximity to the University of New South Wales and excellent local amenities. Notably, Randwick’s median house price has averaged AUD 5.14 million, with properties typically spending 50 days on the market.
Coogee has performed even more impressively, with house values jumping 14.7% over the past year. Its family-friendly beach, ocean pools, and scenic coastal walks continue to attract buyers seeking a balanced lifestyle. Maroubra, meanwhile, offers a more relaxed beachside atmosphere with spacious homes and family-friendly parks, making it increasingly popular among buyers priced out of other eastern suburbs.
Townhouses in Inner West and St George: Marrickville, Hurstville
Medium-density living has gained traction as buyers seek alternatives to standalone houses. In Marrickville, townhouses have become particularly sought-after, with the suburb showing strong investor appeal due to rental yields reaching 4.08% for units. Primarily attracting young professionals and families, Marrickville benefits from its proximity to Sydney’s CBD – just a 10-minute bus or train ride to Broadway and Central Station.
Similarly, Hurstville in the St George area has established itself as an up-and-coming suburb located 16 kilometres south of Sydney’s CBD. Often dubbed “little Hong Kong,” it offers excellent transport connections with trains reaching the CBD within 20 minutes. The median price for three-bedroom houses in Hurstville stands at AUD 2.63 million, with properties selling in just 24 days on average.
Boutique Apartments in Lifestyle Hubs: Bondi, Surry Hills, Redfern
Boutique apartment developments have outperformed high-density counterparts, offering several advantages:
- Lower strata rates with fewer facilities to maintain
- Easier management with fewer residents
- Greater uniqueness in the market, supporting capital growth
North Bondi has recorded 36% growth, while Surry Hills has increased by 30.5%. Boutique developments like No.1 Onslow Place in Elizabeth Bay exemplify this trend, featuring only six apartments with direct lift access and premium finishes. Indeed, apartments in Surry Hills currently provide a median gross yield of 3.9%, with weekly rents growing 9.09% over the past 12 months.
Sydney Rental Market Analysis
Rental conditions across the Sydney property market present a complex picture in 2025, with subtle shifts emerging after years of intense pressure on tenants.
Vacancy Rate Trends: SQM Research Data
Sydney’s rental market shows initial signs of easing, with the vacancy rate rising to 1.5% in April 2025, up from 1.2% in April 2024. This modest increase has translated to 10,784 available properties—a 20.8% year-on-year growth. SQM Research collects this data by monitoring unique online listings advertised for three weeks or more and then calculating vacancies as a percentage of total rental stock. Despite this slight improvement, the current rate remains well below 3%, which is considered healthy, indicating persistent market tightness.
Weekly Rent Growth and Rental Yields
Rental prices remain elevated throughout Sydney, with the average weekly rent standing at AUD 1304.23, though showing no monthly change and only a marginal 0.1% increase year-on-year. Houses command AUD 1184.97 weekly, reflecting a 3.3% annual increase, whereas units reach AUD 1108.52, up 3.6% over the same period. Currently, these growth rates imply a substantial deceleration—quarterly rent increase has more than halved since March 2024.
In terms of returns, Sydney’s gross rental yield averages 3.1%, distinctly lower than other Australian capitals. Certain suburbs, nevertheless, offer substantially higher yields—Ultimo tops the list at 6.1%, followed by Homebush houses at 6.0%, and Mascot units at 6.4%.
Rental Crisis in High-Demand Suburbs
Although beginning to stabilise, Sydney’s rental market remains challenging in sought-after locations. The Central Coast region exhibited the strongest rental growth, with unit rents surging 10% to AUD 840.94 weekly and house rents increasing 8.3% to AUD 993.84. Parramatta and the outer southwest also recorded substantial growth of 7.1% and 6.7%, respectively.
Rather than affordability constraints limiting rent increases, landlords appear to have slightly reduced their expectations. Consequently, rents have fallen or remained static in more than one-third of Sydney suburbs—a welcome development for tenants, albeit insufficient to resolve ongoing rental pressure.
Conclusion – Sydney Property Market
The Sydney property market certainly displays remarkable resilience despite numerous challenges throughout 2025. Although dwelling approvals continue declining, property values have maintained growth momentum following the February interest rate cut.
Rental market conditions show tentative signs of easing. The vacancy rate has increased slightly to 1.5%, though still well below the 3% threshold considered healthy. Consequently, weekly rents remain elevated at AUD 1304.23, albeit with growth rates decelerating compared to previous years.
Population dynamics will undoubtedly shape the Sydney property landscape for years to come. Nevertheless, structural barriers continue hampering construction efforts, with government taxes and charges constituting nearly half the cost of new house and land packages.
The Sydney property market thus stands at a crossroads. Despite short-term fluctuations, long-term fundamentals support continued price growth across desirable suburbs. First-time buyers still face significant challenges, while investors must carefully select properties based on location quality, building type, and amenities.
Related: Melbourne Property Market 2025: Key Insights & Predictions
What is the current trend in Sydney property prices?
Sydney property prices have shown resilience, with the median price for all capital city dwellings now at $1,203,395, a 1.1% increase year-on-year. House prices are outperforming units, with the median price for capital city houses reaching $1,486,373, reflecting a 1.6% year-on-year increase.
What are the population growth projections for Sydney, and how might this impact housing demand?
Greater Sydney’s population is expected to increase by 1.4 million to reach 6.3 million by 2041. This substantial growth is likely to intensify housing demand, particularly in areas with good amenities and transport links.
Which suburbs and property types are performing well in Sydney?
Family homes in eastern suburbs like Randwick and Coogee are showing strong growth, with house values increasing by 8.1% and 14.7%, respectively, over the past year. Boutique apartments in lifestyle hubs such as North Bondi and Surry Hills are also performing well, with growth rates of 36% and 30.5%, respectively.
What is the current state of Sydney’s rental market?
Sydney’s rental market shows signs of slight easing, with the vacancy rate rising to 1.5% in April 2025. However, the average weekly rent remains high at $1,304.23. Rental yields vary across suburbs, with some areas like Ultimo offering yields as high as 6.1%.