As we progress through 2025, the question on many minds is whether the Sydney property market is still rising or stabilising. As buyers’ agents, we see anecdotal evidence every day of sales results and buyer activity that may or may not be indicative of wider trends. It is always important to assess what those wider trends look like so that our clients can remain in control of their property-related decisions.
This article provides an in-depth analysis of current trends, challenges, and opportunities in the Sydney property market, offering valuable insights for property buyers navigating this dynamic landscape.
Current Market Trends
The Sydney property market has demonstrated resilience despite affordability challenges and fluctuating economic conditions. Let us not forget that Sydney’s median house price increased by approximately 27% – 30% from 2020 to 2022 during the time of the COVID pandemic.
Recent data from CoreLogic indicates that in spite of the much talked about “cost of living crisis” housing values have edged 0.3% higher in just the month of February 2025, with houses outperforming units slightly in terms of price growth. This modest increase follows a period of minor declines, suggesting renewed buyer confidence in certain segments of the market.
However, this growth is not uniform across all areas. Premium suburbs, particularly those in Sydney’s Inner West and Eastern Suburbs are expected to continue to perform strongly due to their desirability and proximity to the CBD and lifestyle amenities. Conversely, some of the more affordable suburbs are expected to face slower growth due to ongoing affordability constraints and rising living costs.
Factors Driving Price Movements
Several factors are shaping the trajectory of Sydney’s property market:
- Interest Rate Cuts
The Reserve Bank of Australia (RBA) implemented its first interest rate cut in February 2025, improving borrowing capacity and boosting buyer sentiment. This policy shift has contributed to increased activity among property buyers, particularly in affluent suburbs. - Supply Constraints
A limited supply of properties for sale continues to exert upward pressure on prices. Construction bottlenecks and high building costs have hampered new housing developments, concentrating demand on existing properties. - Population Growth
Based on data from the NSW Department of Planning, Housing and Infrastructure, Sydney’s population is projected to grow significantly over the next decade, with an estimated 650,000 new residents in Sydney by 2034. This demographic shift will further strain the already undersupplied housing market significantly. - Rental Market Stabilisation
While rental growth has slowed compared to previous years, vacancy rates remain historically low. This trend underscores strong demand for housing across both rental and owner-occupied markets.
Is the Market Stabilising?
Despite recent price increases, there are signs that the Sydney property market may be entering a stabilisation phase. Domain forecasts that house and unit prices will rise by 4-6% in Sydney in 2025. This would be up from the 3.2% increase posted in 2024 but down from approximately 10% in 2023.
Moreover, CoreLogic data reveals that Sydney’s quarterly price growth remains fragile, with values down 0.9% over the last three months. SQM Research recently predicted that Sydney home prices could fall by 1% – 5% due to affordability challenges and delays in anticipated interest rate cuts.
These mixed signals suggest that while some segments of the market are recovering strongly, others are struggling to maintain momentum.
Challenges Facing Property Buyers
For property buyers in Sydney, affordability remains a significant hurdle. The city continues to rank among the most unaffordable housing markets globally, making it increasingly difficult for first-time buyers to enter the market. Rising interest rates over recent years have further constrained borrowing capacity, although the recent rate cut along with any future rate cuts may offer some relief.
Additionally, the persistent shortage of housing stock means buyers face intense competition for quality properties. This imbalance between supply and demand has led to bidding wars and elevated prices in sought-after suburbs.
With many competing factors across the Sydney property landscape, now, more than ever, selecting the right house in the right suburb will be crucial for successful property investment.
Opportunities for Property Buyers
Despite many challenges, there are opportunities for strategic property buyers:
- Investing in High-Performing Suburbs
Affluent inner-ring suburbs such as Surry Hills and Randwick continue to outperform due to strong demand and higher household incomes. Similarly, gentrifying middle-ring suburbs like Croydon and Ashfield offer excellent capital growth potential. - Targeting Infrastructure Growth Areas
Western Sydney suburbs benefiting from major infrastructure projects—such as St Marys and Marsden Park—are attracting significant interest due to improved connectivity and affordability. - Leveraging Buyers’ Agents
Engaging experienced buyers’ agents can provide access to off-market properties and expert negotiation skills, ensuring buyers secure favourable terms while avoiding overpayment.
The Role of Buyers’ Agents
Navigating Sydney’s complex property market can be daunting without professional support. Buyers’ agents play a crucial role in guiding property buyers through every stage of the purchasing process. Their local expertise enables them to identify high-growth areas and access exclusive off-market opportunities that may not be visible to other buyers.
Moreover, buyers’ agents provide objective advice tailored to individual needs, helping clients make informed decisions amidst fluctuating market conditions. Their negotiation skills can be invaluable in securing properties at competitive prices while minimising stress for buyers.
Conclusion
The Sydney property market remains dynamic as we move further into 2025. While certain segments continue to rise—particularly premium suburbs—the overall pace of growth is slower compared to previous years. For property buyers seeking opportunities amidst these shifting conditions, timing will be crucial.
Engaging professional support from experienced buyers’ agents can provide a significant advantage in navigating this challenging landscape. At Buyer’s Domain, we specialise in helping clients secure their ideal properties by providing expert advice and tailored strategies.
Whether you are looking to invest or purchase your dream home in Sydney’s Inner West or beyond, contact us today for personalised assistance from our team of dedicated buyers’ agents.
