As we step into 2025, Sydney’s property market is shaping up for another intriguing year. With a mix of economic shifts, policy changes, and evolving buyer sentiment, real estate experts are forecasting a market that continues to defy expectations. So, what can we anticipate in Sydney’s housing sector this year?
House Prices: A Slow but Steady Climb?
According to a recent report from CoreLogic, Australian house prices are expected to rise modestly in 2025, with Sydney likely to see a 2-4% increase in median property values. This follows a stronger-than-expected 2024, where demand remained resilient despite high interest rates. Analysts at Westpac predict that as inflation stabilizes and interest rates begin to ease, confidence will return, supporting continued price growth.
The Australian Financial Review (AFR) also suggests that premium suburbs, particularly in Sydney’s Eastern Suburbs and Lower North Shore, will continue to outperform the broader market, driven by strong demand and limited supply. Meanwhile, outer suburbs like Box Hill and Marsden Park are set to benefit from ongoing infrastructure development.
Interest Rate Cuts: A Game-Changer?
One of the most critical factors influencing Sydney’s property market in 2025 is monetary policy. Vanguard Economics (Vanguard) expects the Reserve Bank of Australia (RBA) to introduce interest rate cuts in mid-2025, which could provide relief for mortgage holders and stimulate buyer activity.
Lower borrowing costs could encourage first-home buyers to re-enter the market, particularly in the $700,000–$1 million price bracket, which has seen decreased activity due to affordability constraints.
Rental Market Pressures Continue
Sydney’s rental crisis remains a major challenge. With vacancy rates at record lows and rents surging by over 10% in the past 12 months (Domain Rental Report, 2024), affordability concerns persist for tenants. The Sydney Morning Herald (SMH) reports that Western Sydney suburbs like Parramatta, Blacktown, and Liverpool are feeling the squeeze the most, as demand for affordable rentals skyrockets.
SQM Research predicts that rental growth will continue in 2025, albeit at a slower pace, as new supply from completed apartment projects begins to ease pressure. However, with migration levels still high, securing a rental in Sydney will remain a challenge.
The Bottom Line
For buyers and investors, Sydney’s property market in 2025 will likely offer gradual growth, shifting affordability, and an evolving interest rate landscape. If you’re thinking of buying, keeping a close eye on interest rate movements and suburb-specific trends will be key.
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