Growth on the cards for the Sydney market in 2025
Sydney’s transaction levels have remained strong in the first quarter of 2025, with the property market experiencing demand for various housing types across the price spectrum.
After a slowdown in 2024, Corelogic’s head of research, Eliza Owen, said that Sydney’s housing market showed renewed momentum in early 2025, suggesting a more optimistic outlook.
Owen noted that affordability constraints, high interest rates, and cost-of-living pressures significantly impacted the market’s performance in 2024, with Sydney property values facing a 2.2 per cent decline between September 2024 and January 2025.
“Sales volumes across Sydney were also weaker than usual through the first quarter of the year, sitting at 28.3 per cent below the five-year average,” she said.
According to the research head, the increase in sale volumes contributed to a rise in total listings across Sydney to 23,500 by 30 March 2025.
“This marked a 10.3 per cent above the historic average, helping conditions err towards a buyer’s market,” Owen said.
Owen added that February’s price growth shifted the market in a more positive direction, noting that Sydney’s dwelling values rose by 0.4 per cent, followed by an additional increase of 0.3 per cent in March.
According to Owen, Sydney’s weekly auction clearance rates also indicated a market recovery, reaching a peak of 67.2 per cent for the week ending 16 February.
The data showed that the auction clearance rate averaged 63.2 per cent over March, 3.1 percentage points higher than the 60.1 per cent average recorded from last year’s spring selling season.
Owen said the rebound in dwelling values in Sydney was reflected nationally.
“The Westpac-MI Consumer Sentiment Index, which historically has been broadly correlated with sales volumes, rose 4 per cent nationally in March, a three-year high, in the wake of the February rate cut,” she said.
Owen reported that increased confidence in the domestic economic outlook is anticipated to lead to a more active buying and selling market, particularly in Sydney’s high-end market segments.
She pointed out that the premium market has led Sydney’s property market resurgence with the biggest turnaround in market conditions across Sydney.
“The strong turnaround seen in Sydney’s upper quartile values are in line with earlier CoreLogic modelling, which suggests that relatively high-priced, central locations in Sydney see bigger price falls when interest rates rise, and stronger recovery in values when they begin to fall,” she said.
She said that across Sydney’s market, luxury dwelling values rose 0.6 per cent in the three months to March, compared to 0.1 per cent in the middle market and 0.3 per cent in the lower-value dwellings.
“The biggest uplifts were concentrated in North Sydney, the eastern suburbs and the inner west,” Owen said.
“Assuming further rate cuts in 2025, buyers can expect a more substantial boost in demand to the higher-end markets of Sydney, as borrowing capacity rises,” she remarked.
Owen said that while the Sydney market appears to be entering a new growth phase, affordability continues to be a longstanding challenge.
“As of December, the median dwelling value to income ratio was 9.8, and the median household required more than 13 years to save a 20 per cent deposit,” she said.
She said that increasing the availability of low- and mid-rise “infill“ housing could help tackle housing affordability by utilising existing infrastructure and encouraging more sustainable urban development.
To respond to the growing demand, the NSW government introduced two zoning reforms in 2024 that laid the groundwork for future growth and improved housing affordability.
“From July 2024, dual occupancies and semi-detached homes were permitted in all R2 zones and in February 2025, 127 town centres and transport hubs were also earmarked for low- and mid-rise development,” Owen said.
“Given the recency of these policies, it is difficult to see any market impact reflected in sales, value or dwelling approvals data yet.”
Owen indicated that while the NSW government’s policies are not “yet to be fully felt”, expectations are that these policies will improve seller outcomes due to rising land values and potential development opportunities.
“News outlets are already reporting the formation of ‘super lots’ as neighbours band together for potential sales to developers,” Owen said.
“While other feasibility challenges still remain, the removal of the zoning hurdles is a positive for both current home owners looking to sell up, and prospective buyers looking for more affordable, low-maintenance housing options.”