If you’re considering investing in Sydney’s property market, now is the time to assess current trends and plan for opportunities in 2026. 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 2025, 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 2025? 

The Sydney property market experienced a solid recovery in 2025, with dwelling values rising by 4.0 per cent as of October 2025. This growth was slightly below the national average of 6.1 per cent for the same period. The market's rebound was marked by a steady increase in property values after a cyclical low in late 2024, with prices reaching new record highs by the end of 2025.

Houses in Sydney saw an annual growth rate of 5.1 per cent, with a median value of approximately $1.58 million as of October 2025. Units, on the other hand, grew by 1.2 per cent annually, with a median value of around $890,000. The quarterly growth for houses was 2.5 per cent, indicating a stronger performance compared to units, which grew by 1.8 per cent in the same quarter.

Sales volumes in 2025 were buoyant, driven by strong buyer demand and high auction clearance rates, which consistently exceeded 70 per cent during the spring season. However, the number of homes on the market remained low, as many owners opted not to list, anticipating further price gains or being fearful of finding their next home to buy. This mismatch between supply and demand kept upward pressure on prices throughout the year.

The rental market in Sydney was extremely tight in 2025, with vacancy rates hovering around 1.3 per cent. Rents reached record highs, with median weekly rents for houses at $780 and units at $750 by the September quarter. Dr Nicola Powell, Chief of Research at Domain, noted that "rental growth has been brutal," but the pace of rent increases began to stall by late 2025, providing some relief to tenants.

Commenting on the broader conditions, Eliza Owen, Head of Research at Cotality, reflected that "you’ve got more demand in the housing market, with real wages growth up to its highest level in five years, lower interest rates and more consumer confidence aiding housing purchases".

Sydney property market forecast and price predictions 2026

The Sydney property market in 2026 is expected to experience solid growth, with most major banks predicting an upswing in prices. Westpac is particularly optimistic, forecasting an +8 per cent rise in Sydney property values, driven by limited housing supply and improved buyer confidence following recent interest rate cuts. NAB and ANZ also foresee growth, projecting around +6 per cent and +5.8 per cent increases respectively, while CBA anticipates a more modest +4 per cent rise.

Key drivers of this growth include lower interest rates, which have increased borrowing power and stimulated demand. According to Dr Nicola Powell from Domain, "lower interest rates, cheaper borrowing, and targeted support for first-home buyers will keep prices rising, especially in Sydney and Melbourne". Additionally, the tight housing supply in Sydney, with listings running below normal levels, is contributing to the competitive market conditions.

Sydney is expected to outperform other capital cities, with Domain projecting a +7 per cent increase in median house prices, reaching a record high of approximately $1.83 million. This growth is slightly ahead of Melbourne, which is forecast to see a +6 per cent rise. The combination of strong demand, limited supply, and high rental costs is pushing more people from renting to buying, further bolstering the market.

While the outlook is generally positive, experts caution about affordability challenges. CBA's chief economist, Luke Yeaman, notes that while the market is picking up, "we're not expecting as big a lift as we've seen in the past". Beyond the affordability concern, any unexpected economic shocks or pauses in rate cuts could temper the optimistic forecasts, and recent inflation figures have been less than ideal. Nonetheless, the consensus among forecasters is that the Sydney property market predictions for 2026 are encouraging, with modest to strong price appreciation expected.

What are the best suburbs to invest in Sydney in 2026?

We've put together a list of ten of Sydney's top investment suburbs for 2026 according to OpenAgent analysis of short-term and long-term growth patterns, listing activity, selling speed and rental yields. 

Bankstown, NSW 2200

Bankstown stands out with a median house price of $1,670,000, reflecting a robust annual growth rate of +26.3 per cent. This suburb has seen a remarkable five-year growth of +67.0 per cent, indicating strong long-term demand. Known for its multicultural community and vibrant food scene, Bankstown offers good rental prospects with a median rent of $750 per week, delivering a yield of 2.8 per cent. The area's ongoing urban renewal efforts and connectivity via the Sydney Metro increase its attractiveness to investors looking for solid growth potential.

Lidcombe, NSW 2141

Lidcombe presents a compelling investment with a median house price of $1,972,500 and a notable 12-month growth of +20.3 per cent. Over five years, the suburb has achieved a +79.3 per cent increase, pointing to strong and sustained capital growth. The area is well-served by public transport, including a major train station, enhancing its appeal to renters and commuters. With a diverse population and a flourishing local economy, Lidcombe is attractive for investors seeking a growth-tilted market with promising long-term prospects.

Mount Pritchard, NSW 2170

Mount Pritchard offers investors a median house price of $1,140,000, with annual growth of +20.6 per cent and a five-year growth figure of +72.7 per cent. Known for its family-friendly environment and community feel, it's becoming increasingly popular among young families. The suburb provides a gross rental yield of 3.2 per cent with a median rent of $600 per week, making it a desirable choice for those looking to balance capital appreciation with rental income.

Gladesville, NSW 2111

With a median house price of $3,116,500, Gladesville has seen consistent growth, with a 12-month increase of +20.6 per cent and a five-year rise of +73.1 per cent. The suburb's proximity to the Parramatta River and its appealing mix of residential and commercial areas attract a variety of tenants and homeowners. The rental market remains active, with a median rent of $1,050, offering a steady yield despite the high property value.

North Bondi, NSW 2026

This sought-after beachside suburb reports a median unit price of $1,705,000, with impressive 12-month growth of +25.8 per cent. Over the past five years, the area has seen a +40.6 per cent increase. Known for its laid-back lifestyle and coastal charm, North Bondi offers investors a gross rental yield of 3.7 per cent, making it popular among both surfers and city professionals.

Freshwater, NSW 2096

Freshwater's median unit price of $1,265,000 reflects a 12-month growth of +14.5 per cent with a five-year gain of +43.8 per cent. Known for its beautiful beach and community vibe, it remains a popular choice for residents looking for a balanced lifestyle. With a rental yield of 3.4 per cent and easy access to amenities, Freshwater is particularly appealing to investors seeking long-term growth with lifestyle perks.

Werrington, NSW 2747

With more accessible pricing, Werrington offers a median unit price of $677,500 and a moderate annual growth of +6.7 per cent. Its five-year growth figure stands at +71.8 per cent, underlining its potential for continuing capital appreciation. Located within reach of the Western Sydney University and public transport links, Werrington is ideal for investors targeting the student rental market, supported by a robust rental yield of 4.5 per cent.

Airds, NSW 2560

Airds features as an affordable option with a median house price of $835,000, marking a 12-month increase of +14.4 per cent and a robust five-year growth of +75.8 per cent. As part of an urban renewal area, the suburb is undergoing significant redevelopment, making it appealing for investors looking for long-term capital growth. Its rental yield stands at 3.8 per cent, backed by a median weekly rent of $545.

Maroubra, NSW 2035

For investors eyeing the unit market, Maroubra offers a median price of $1,182,500, with a strong annual growth rate of +23.2 per cent. Over five years, prices have grown by +34.4 per cent. Its beachside location and vibrant lifestyle continue to attract tenants, supported by a gross rental yield of 4.1 per cent, which remains appealing despite the premium property values.

Canley Heights, NSW 2166

Canley Heights presents itself as a promising market for investors with a median house price of $1,315,000, demonstrating a 12-month growth of +17.4 per cent and a five-year growth of +66.5 per cent. Noted for its lively dining scene and strong sense of community, it offers solid rental returns with a yield of 3.0 per cent and a steady tenant demand. The ongoing development in the area ensures its potential for future growth.

Disclaimer: Rankings use OpenAgent’s internal weighted scoring of price growth, days on market, listings and indicative yield. General information only—not financial advice; figures are estimates; past performance is not reliable. Always seek independent advice.