Media Release – NSW End of Financial Year Real Estate Market Review

As the 2024–25 financial year draws to a close, the New South Wales real estate market reflects a period of transition. After a strong start, momentum has moderated in recent months, shaped by ongoing cost-of-living pressures, interest rate anticipation, global uncertainty and a lower-than-average supply landscape (14% below 5 year previous average). Both Sydney and regional markets have followed distinct but related paths, with resilience evident across much of the state.

In Sydney, property values experienced modest, yet positive growth overall. House prices increased by approximately 3 – 4% over the year, while apartment values lifted slightly less, by around 2 – 3%. Strong performance has also been noticed in the premium property segment, although growth across the entire market continues to be driven primarily by the more affordable end.

While the first half of the financial year saw buyer confidence return amid expectations of interest rate cuts, those expectations were tempered in early 2025 as inflation proved more persistent than forecasted. “Affordability metrics also reflect some of the most challenging buying conditions on record for median income households” – according to Cotality.  This has ultimately led to a softening in quarterly growth and a more cautious tone in the market during the final months of the financial year.

Rental markets in the capital showed signs of relief. After record-tight vacancy rates in 2023, Sydney saw a gradual easing, with over a third of suburbs recording rent declines in recent months. Increased investor activity and a small uplift in new rental supply helped reduce pressure in key inner-city and middle-ring areas. In saying that, Cotality’s metrics show that growth is still above the pre-COVID average.  We are yet to see the impact of the controversial and significant new rental reforms on the market….watch this space!

For first home buyers, despite record figures around lack of housing and affordability, buyer numbers have remained resilient. We could see them become more active in the next financial year due to a combination of government incentives, forecasted lowering interest rates and lower mortgage costs.

In regional NSW, growth was more stable and in some cases, stronger than in metropolitan areas. Lifestyle-driven demand, particularly in the Hunter Valley, Illawarra and parts of the Central West, kept prices elevated. These regions benefited from relative affordability, improved infrastructure and ongoing hybrid work arrangements. Annual growth across regional housing markets ranged from 3 – 5%, depending on location and property type.

Over the course of the year, broader structural trends became more pronounced. Population movement from metro to regional areas remained significant, as buyers sought space and value. At the same time, state government planning reforms and infrastructure investment in Western Sydney and select regional hubs signalled a longer-term shift toward decentralisation.

Looking ahead, the NSW market enters FY 2025–26 with a sense of cautious optimism. Interest rates remain a key variable, but improving rental yields and easing construction bottlenecks could support further stability. Overall, while price growth may remain subdued in the short term, both capital city and regional markets are well-positioned for sustainable performance in the year to come. We anticipate the second half of the next financial year to kick!