Sydney’s property market is still on the up, marking its fourth consecutive month of growth in May.
While the pace of Sydney’s property price growth might not be breakneck, it’s consistent:
- May 2025 Monthly Growth: +0.5%
- Year-to-Date Growth (2025): +1.3%
- Annual Growth (to May 2025): +1.1%
- Current Values vs. Peak: Still a smidge (0.3%) below their all-time highs, after a 1.9% dip in the four months leading up to January 2025.
This shows a market that’s shaken off earlier dips and is finding its feet, albeit cautiously.
Note: Nationally, dwelling values rose 1.7% over the first five months of the year, so Sydney is tracking a little behind the national average in terms of year-to-date gains but is firmly in positive territory.
Sydney housing market trends
| Timeframe | Change (%) |
|---|---|
| Monthly (May 2025) | +0.5% |
| Year-to-Date (2025) | +1.3% |
| Since Peak (Sept 2024) | −0.3% |
| Annual Growth (to May 2025) | +1.1% |
Source: Cotality Australia
Interestingly, the growth isn’t uniform across property types in Sydney. So far in 2025:
- Houses: Values are up by a solid 1.7%.
- Units: Values have remained relatively flat.
This divergence suggests buyers might be prioritising space, or perhaps different affordability pressures are at play in these segments.
- Also read:Perth housing market update | June 2025
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- Also read:Melbourne property market forecast for 2025 | Is it a good time to invest in Melbourne?
- Also read:Sydney property market forecast for 2025. Is it a good time to invest in Sydney?
For renters and landlords, the landscape is shifting. Cotality notes that Sydney, along with Melbourne, is now among the “softest rental markets in the country.” This follows a period of “extreme rental growth,” so a bit of a breather might be welcomed by tenants.
- Weekly Rent:
- Houses: $760
- Units: $720
- Gross Rental Yield:
- Houses: 2.7%
- Units: 4.2% (Units still offering a stronger yield)
- Annual Change in Rent:
- Houses: +1.4%
- Units: +2.6% (Unit rents still seeing stronger annual growth despite overall market “softness”)
The national trend points to slowing rental growth due to a combination of affordability constraints for tenants and a normalising net overseas migration, which naturally impacts rental demand in a gateway city like Sydney.
Sydney house prices – the longer-term data
Several factors are influencing Sydney’s property scene:
- Interest Rate Cuts: The recent rate cut in May and the widespread expectation of further cuts throughout 2025 are undoubtedly boosting confidence and borrowing capacity.
- Auction Clearance Rates: Nationally, auction clearance rates hit 65.1% after the May rate cut – the highest since July 2024 – signalling renewed buyer confidence.
- Government Initiatives: The Labour Party’s federal election win and their first home buyer initiatives, particularly the government-backed deposit guarantees (even if the expanded 5% scheme is for next year), could see some buyers trying to get in early in 2025.
Headwinds (challenges & constraints):
- Affordability Pressures: This is a big one. Nationally, the dwelling value to household income ratio was at a near-record 8.0 at the end of last year, and home loan serviceability was also at an all-time high. Sydney is certainly no exception.
- Lending Policies: Prudent lending, with restrictions on high debt-to-income ratio loans (around 6% or less of new loans since 2023 have a DTI of 6× or higher), will likely keep a lid on runaway price growth.
- Economic Outlook: The RBA forecasts core inflation to be within its 2–3% target by June this year, but to hold there until mid-2027. Unemployment is tipped to rise to 4.3% by year’s end, and GDP growth is forecast at a relatively soft 2.1% for 2025. These factors suggest a tempered economic environment.
- Slowing Population Growth: While still positive, a slowdown in population growth (partly due to normalising net overseas migration post-COVID catch-up) will ease some of the intense demand pressure seen previously.
We’re looking at a market that’s finding a new equilibrium – growth is on the cards, but it’s likely to be a more measured and sustainable journey through the rest of 2025.
