Key takeaways
Demand for quality homes in affluent areas will remain strong, particularly for 3-4 bedroom houses in neighborhoods with good schools, transport, and amenities.
With Sydney's move towards medium-density living, townhouses are an appealing option due to their affordability and lifestyle benefits. Popular areas include gentrifying suburbs in Sydney's Inner West and St George region.
Avoid high-density developments and focus on boutique, low-rise apartments in vibrant areas like Bondi or Parramatta, which offer long-term rental demand and capital growth.
Suburbs benefiting from infrastructure projects, such as transport upgrades or new hospitals, are likely to outperform.
Gentrifying areas with lifestyle improvements and a growing population signal good investment potential.
As we look ahead to Sydney's property market in 2025, it's clear that certain types of residential investments will outperform others, fuelled by demographic shifts, evolving lifestyle preferences, and economic factors.
Best-performing property types
1. Family Homes in Premium Suburbs
The ongoing preference for space, especially among families, means demand for quality houses in established, affluent suburbs will remain high.
While Sydney's median house prices are steep, well-positioned family homes in prestigious areas continue to offer solid long-term capital growth.
Investors should look for 3-4 bedroom houses on sizable blocks in well-established neighbourhoods with access to good schools, amenities, transport links, and green spaces.
2. Townhouses in Middle-Ring Suburbs
Townhouses represent an increasingly popular choice for both investors and owner-occupiers due to their affordability relative to standalone houses and the lifestyle advantages they offer.
With Sydney's shift towards medium-density living, townhouses are expected to remain in demand, especially in middle-ring suburbs experiencing gentrification.
Investors should target 3-4 bedroom modern townhouses in low-density developments with a focus on functional living spaces, private courtyards, and proximity to amenities.
3. Boutique Apartments in Lifestyle Hubs
I would avoid high-density apartment developments, but boutique “family-friendly” apartments in lifestyle hubs have proven resilient over the last few years and are likely to continue to outperform in the future as currently, investors can buy established apartments considerably below replacement cost.
The key is to target smaller, low-rise complexes in vibrant areas where demand from young professionals, students, and downsizers remains high.
Look for spacious, high-quality 1-2 bedroom apartments with balconies, modern finishes, and access to cafes, restaurants, and public transport.
Suburbs to target for each property type
Family Homes
Eastern suburbs like Randwick, Coogee, and Maroubr continue to be sought after by families due to their proximity to the CBD, beaches, quality schools, and lifestyle amenities.
They offer strong long-term growth and steady rental demand.
In the Lower North Shore, investors should consider Willoughby, Lane Cove, and Artarmon.
These family-friendly suburbs with excellent schools, green spaces, and easy access to the city are perennial favourites among renters and homebuyers alike.
On Sydney’s Northern Beaches the suburbs of Dee Why, Mona Vale and Freshwater attract families looking for a relaxed lifestyle close to the beach, good schools, and outdoor activities.
They offer strong growth potential as more people prioritise lifestyle and work-from-home options.
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – October 2024
- Also read:11 factors that affect the value of your property
- Also read:Buying an Investment Property in Australia: A step-by-step guide for Expats
- Also read:What does a bank valuer look for?
- Also read:Why the ripple effect can only go so far
Townhouses
Sydney’s Inner West offers excellent opportunities for townhouse investments.
The suburbs of Marrickville, Dulwich Hill, and Petersham offer a vibrant culture, proximity to the CBD, and ongoing gentrification.
These suburbs are popular with young professionals and families looking for a balance between urban living and suburban space.
In the St George area Hurstville, Kogarah, and Carlton have been experiencing significant growth due to infrastructure upgrades and its proximity to Sydney’s CBD and airport.
The demand for townhouses in these suburbs is strong, particularly among families and professionals.
Sydney’s North-West growth corridor has become an attractive location for townhouse investments.
Rouse Hill, Kellyville, and Castle Hill are areas worth considering, with expanding infrastructure, shopping centres, and schools, these suburbs offer a blend of affordability, accessibility, and lifestyle.
Boutique Apartments
Boutique apartments in Sydney’s eastern suburbs of Bondi, Bronte, and Coogee always attract high demand due to their proximity to the beach, CBD, and a plethora of dining and shopping options.
Quality apartments with ocean views or easy beach access will always outperform
Investors should also consider apartments in the inner suburbs of Surry Hills, Darlinghurst, and Redfern.
These lifestyle-focused suburbs are popular with young professionals and couples seeking a vibrant, urban lifestyle close to work, dining, and entertainment.
Apartments in well-designed, low-rise developments here continue to offer strong rental yields and capital growth.
As Sydney's "second CBD," Parramatta offers excellent growth potential.
Its thriving economy, infrastructure upgrades, and position as a major employment hub make it an ideal location for boutique apartment investments.
Some other thoughts for investors
- Suburbs benefiting from major infrastructure projects, such as new transport links, hospitals, or shopping precincts, are likely to outperform. These investments often lead to increased demand and rising property values.
- Areas undergoing gentrification, where older properties are being renovated and lifestyle amenities are improving, often provide excellent capital growth opportunities. Look for signs such as new cafes, restaurants, and young families moving in.
- Population Growth:** Target suburbs with strong population growth driven by immigration, young professionals, or families, as this is a clear indicator of rising demand for both rental and owner-occupied properties.
Investing in Sydney's property market in 2025 offers significant opportunities, but it's crucial to choose the right property type and location.
Family homes in premium suburbs, townhouses in gentrifying middle-ring areas, and boutique apartments in lifestyle-focused neighbourhoods are likely to deliver the best returns.
By targeting suburbs with strong growth drivers, infrastructure upgrades, and lifestyle appeal, you’ll position yourself to benefit from Sydney's ongoing demand for quality housing.
