If you’re considering investing in Sydney’s property market, now is the time to assess current trends and plan for opportunities in 2025. Sydney remains one of Australia’s most dynamic real estate markets, offering attractive prospects for investors seeking growth, rental returns, and long-term capital gains.

In this article, we’ll start with an overview of how Sydney’s housing market performed in 2024, before diving into expert house price forecasts and highlighting the top suburbs for property investment in Sydney next year. 

Whether you’re looking at high-demand suburbs in the Inner West, family-friendly neighbourhoods in the city's North, or growth corridors in Western Sydney, understanding the market’s trajectory is crucial for making informed decisions.

What did the property market in Sydney look like in 2024? 

Sydney’s property market saw modest gains in 2024, with CoreLogic data showing values rising by 2.3 per cent for the year. Property prices peaked at $1,189,000 in September before dipping slightly in the final months of the year. Houses outperformed units, recording an annual increase of 2.5 per cent compared to 1.8 per cent for units, although units demonstrated greater resilience in the second half of the year as affordability pressures began to weigh more heavily on buyers.

Seller activity increased significantly, particularly in the latter half of 2024, with new listings rising by 12.5 per cent year-on-year to hit a three-year high by November. This surge in supply gave buyers more choice and reduced competition, easing urgency in the market. 

Rental vacancy rates rose from 1.4 per cent to 2.1 per cent over the year, slightly softening the competitive rental environment. Annual rental growth was moderate, with house rents increasing by 3.1 per cent and unit rents by 2.9 per cent. However, Sydney remains the lowest rental yield market in Australia, with gross rental yields sitting at 3.0 per cent as of December 2024.

PropTrack senior economist Eleanor Creagh noted that affordability constraints and sustained high interest rates have contributed to the slowing pace of price growth, even as demand remains strong. 

Michael Yardney, founder of Metropole Property Strategists, highlighted that buyers are cautious but present, recognising a window of opportunity as borrowing capacities remain limited. He remarked, “In 12 months’ time, the properties purchased today will look like a bargain.” Despite these challenges, strong buyer demand due to high population growth and constrained supply have continued to drive Sydney’s property market in recent years, with cautious optimism among both investors and sellers heading into 2025.

Sydney property market forecast and price predictions 2025

The Sydney property market in 2025 is expected to remain steady, with forecasts pointing to moderate growth tempered by affordability constraints and high interest rates. Westpac projects annual growth of 3 per cent, reflecting the ongoing challenge of limited borrowing power for buyers. NAB is slightly more optimistic, predicting a 3.7 per cent increase, while Domain takes a rosier view, forecasting gains of 4 to 6 per cent for both houses and units. These predictions suggest the potential for a modest recovery compared to 2024, though external factors such as interest rate movements and economic conditions will play a significant role.

SQM Research adopts a more cautious stance, forecasting potential price declines of between 1 and 5 per cent under its base case scenario for 2025. Louis Christopher, SQM’s managing director, highlighted that Sydney’s housing market is “ripe for a correction,” citing affordability pressures and fair valuation models as indicators. However, Christopher also pointed out that any interest rate cuts in 2025 could trigger a quick rebound in demand, particularly in Sydney and Melbourne, where strong population growth continues to strain housing supply.

Market performance is expected to vary significantly across different segments and locations. According to Allen Habbouchi, Head of Project Sales and Distribution at aussieproperty.com, premium properties in desirable inner-city areas are likely to remain resilient, supported by affluent buyers and strong demand. Conversely, suburban regions that experienced rapid price growth during the pandemic may face sharper declines as speculative interest wanes. “Areas with strong infrastructure, amenities, and lifestyle appeal will likely continue to attract buyers, while regions overly reliant on speculative growth could struggle,” Habbouchi told API Magazine.

High interest rates are expected to remain a key challenge for investors in 2025, with the cost of holding and maintaining properties outweighing growth potential for many. This is especially true in the unit market, where rising rents are often insufficient to make investments financially viable. Despite these challenges, Sydney remains an attractive market for investors focused on long-term opportunities, particularly in well-connected and highly desirable locations that offer lifestyle appeal and infrastructure advantages.

The year ahead will hinge on key economic shifts, including interest rate movements and population growth, which are poised to shape buyer sentiment, market activity, and investment strategies across the city. Investors are advised to focus on areas with proven resilience, strong demand drivers, and high-quality infrastructure to navigate Sydney’s complex market conditions in 2025.

What's the Sydney apartment market like?

Sydney’s unit market showed resilience in the second half of 2024, outperforming houses as affordability pressures pushed buyers towards more cost-effective options. CoreLogic data revealed that while units saw a modest decline of 0.7 per cent in the final quarter, houses experienced a larger drop of 1.6 per cent. By December 2024, Sydney’s median unit price stood at $859,963, the highest in the country, reflecting continued demand for apartments in Australia’s most expensive city.

The strength of Sydney’s apartment market can be partly attributed to increased buyer interest in the lower-priced segment of the market. CoreLogic noted that nationally, properties in the bottom quartile—representing the most affordable 25 per cent—rose in value by 10.3 per cent through to November 2024, outperforming higher-priced homes. This shift in demand, driven by stretched affordability, has supported unit prices, making apartments a more accessible option for buyers in Sydney’s challenging market.

Looking ahead, Domain predicts unit price growth of 4 to 6 per cent in 2025, supported by ongoing demand. Michael Yardney advises caution around high-density developments but notes that boutique, family-friendly apartments in lifestyle hubs are likely to outperform. He pointed out that established apartments in desirable locations are currently selling well below replacement cost, presenting a strong value proposition for investors seeking resilience and long-term growth potential.

What are the best suburbs to invest in Sydney in 2025?

We've put together a rundown of ten of Sydney's top investment suburbs for 2025 according to a range of industry experts and forecasters. 

Summer Hill, NSW 2130

With a median house price of $2,355,000 and unit price of $980,000, Summer Hill is one of the Inner West’s most attractive investment suburbs, boasting annual growth of 7.0 per cent and 8.9 per cent, respectively. The McGrath Report 2025 highlights its village charm, strong café culture, and easy Light Rail access to the CBD as key draws for buyers. Known for its heritage homes and vibrant community, Summer Hill continues to evolve into one of Sydney’s coolest precincts, making it a standout choice for investors.

Erskineville, NSW 2043

Erskineville combines heritage charm and modern living, with median house prices at $1,830,000 and units at $1,065,000, recording annual growth of 2.8 per cent and 9.1 per cent, respectively. Smart Property Investment’s Fast 50 report highlights the suburb’s eclectic café culture, excellent transport links, and close-knit community as factors driving its popularity among professionals and families. Its mix of Victorian terraces and boutique apartments, alongside strong demand, ensures Erskineville remains a high-performing investment location.

Avalon Beach, NSW 2107

With a median house price of $2,778,000, Avalon Beach offers a laid-back village lifestyle on Sydney’s Northern Beaches, recording annual growth of -3.8 per cent for houses and +2.3 per cent for units. According to REA’s Hot 100 Suburbs to Watch 2025, Avalon Beach is a perennial favourite, loved for its surfing, fishing, and family-friendly vibe. Strong transport links, proximity to schools, and stunning natural beauty continue to make this coastal suburb an investment gem.

Bardwell Park, NSW 2207

Bardwell Park recorded an exceptional 27.4 per cent annual growth in house prices, reaching a median of $2,100,000. As noted by The McGrath Report 2025, the suburb offers excellent connectivity to the CBD, a golf course, and a growing café scene, making it a rising star in Sydney’s Inner South. Bordering prestigious Earlwood, Bardwell Park combines suburban tranquility with urban convenience, positioning it as a highly desirable investment location.

Castle Hill, NSW 2154

Castle Hill, with a median house price of $2,390,000 and unit price of $950,000, saw house prices grow by 9.0 per cent in 2024. REA’s Hot 100 Suburbs cites its family-friendly amenities, excellent schools, and proximity to the Metro line and Parramatta as key factors boosting its appeal. Offering suburban serenity alongside strong long-term growth prospects, Castle Hill is a standout in Sydney’s Hills District.

Millers Point, NSW 2000

Millers Point, with a median unit price of $1,645,500, combines harbourside living with unbeatable access to Sydney’s CBD and Barangaroo precinct. According to The McGrath Report 2025, the gentrification of its heritage terraces and proximity to major amenities present unique opportunities for buyers. With subdued price growth in recent years, Millers Point offers an attractive entry point for investors looking for prestige and lifestyle.

Enmore, NSW 2042

Enmore, with a median house price of $1,865,000 and unit price of $895,000, experienced significant annual growth for units at 41.5 per cent. REA’s Hot 100 Suburbs describes Enmore as a “hidden gem” with strong capital growth potential, thanks to its Victorian architecture, proximity to the CBD, and thriving arts and dining scene. Home to the iconic Enmore Theatre, this vibrant inner-city suburb offers excellent renovation and investment opportunities.

Frenchs Forest, NSW 2086

Frenchs Forest, with a median house price of $2,325,000, grew by 5.7 per cent in 2024, offering a balance of suburban tranquility and proximity to beaches. REA’s Hot 100 Suburbs highlights its appeal for families and professionals, citing its green spaces, community charm, and access to major hubs like Chatswood and North Sydney. The suburb’s spacious homes and proximity to the Northern Beaches Hospital further enhance its investment potential.

Eastlakes, NSW 2018

Eastlakes, with a median house price of $1,940,000 and unit price of $716,000, recorded annual unit growth of 10.2 per cent. The McGrath Report 2025 describes it as a multicultural suburb with a mix of affordable apartments and cottages, offering strong potential for upgraders. Situated between the airport and the CBD, Eastlakes provides excellent connectivity and lifestyle benefits for young families and professionals.

Lakemba, NSW 2195

Lakemba offers exceptional affordability with a median house price of $1,400,000 (up 19.7 per cent) and unit price of $445,000 (up 12.4 per cent). REA’s Hot 100 Suburbs highlights its strong community, diverse cultural scene, and upcoming Metro project, which will reduce travel time to the CBD to just 22 minutes. Its affordability, transport upgrades, and development potential make Lakemba an attractive investment for first-home buyers and investors alike.