Overview of Market Trends
While the national housing market has begun showing signs of slowing, Sydney continues to march to its own beat, underscored by persistent value growth, tight rental conditions, and sustained buyer demand. According to Cotality’s September 2025 Home Value Index, Sydney’s dwelling values rose another 0.4% for the month, marking the 11th consecutive month of growth. This brings the city’s total capital gain since the market trough in early 2023 to a notable 13.8%.
Even as cost-of-living pressures and interest rate uncertainty weigh on household sentiment elsewhere, Sydney remains buoyed by premium demand, limited stock, and demographic tailwinds.
Dwelling Values & Segmentation
- Monthly Growth: +0.4%
- Annual Growth (12 months): +7.2%
- Median Dwelling Value (All types): $1,167,765
- Median House Value: $1,421,413
- Median Unit Value: $860,247
Houses remain the dominant driver of capital gains, especially in inner-city and harbourside suburbs. However, units are quietly catching up, with investors returning to the segment due to tight rental conditions and relatively better yields.
Regional NSW: Broad-Based Resilience
The Sydney story isn’t just about postcode prestige. Across Regional NSW, dwelling values posted a 0.3% lift in September and are now 3.3% higher over the year. While regions like the Southern Highlands and Mid North Coast experienced stronger gains, the broader resilience signals underlying lifestyle demand and investor confidence in non-metro areas.
Inventory & Listings Pressure
Sydney continues to experience constrained listings, with total stock levels -13.3% below the previous five-year average. This supply shortage is keeping upward pressure on prices and favouring sellers, particularly in high-demand suburbs such as Bellevue Hill, Woollahra, and Vaucluse.
Key insights:
- New listings are increasing slightly with spring, but absorption remains strong.
- Days on market are shortening again in prestige areas.
Rental Market: Tight and Unyielding
- Annual Rent Growth (Houses): +6.9%
- Annual Rent Growth (Units): +8.1%
- Gross Rental Yields (Houses): 2.56%
- Gross Rental Yields (Units): 3.73%
Sydney’s rental market remains fiercely competitive. Vacancy rates continue to hover around record lows (just above 1%), especially in the inner east and lower north shore. This environment continues to support investor confidence, with unit yields now pushing close to 4% in select pockets.
Headwinds and Tailwinds
What’s holding us back:
- Affordability ceiling: Median house values surpassing $1.4M have stretched household borrowing power.
- Interest rate sensitivity: The market is still dancing around RBA signalling, with many buyers wary of further cash rate hikes.
What’s pushing us forward:
- Premium buyer confidence: High-net-worth individuals continue to transact, often off-market.
- Tight stock: Sellers are holding back, and quality listings are being snapped up quickly.
- Migration & population growth: Demand for Sydney’s top-performing school zones and
Final Word from Byron Rose
At Rose & Jones, we’re seeing first-hand the intense demand for quality Sydney real estate, especially from time-poor professionals, expats returning home, and local upgraders with equity to deploy. Off-market transactions are becoming increasingly common, especially in blue-chip suburbs where privacy and discretion are paramount.
As always, our advice to clients is to stay alert, be decisive, and lean on experts who can identify value in a market defined by nuance.
We continue to observe a clear trend: astute buyers are prioritising quality, scarcity, and lifestyle. These factors are outperforming broader economic uncertainty and have positioned Sydney’s top-tier suburbs as some of the most resilient in the country.
Source: CoreLogic Hedonic Home Value Index, September 2025
