That's a wrap 2025!
New South Wales has moved through 2025 in a surprisingly firm upswing. After a soft start to the year, price growth has reaccelerated as buyers adjusted to higher mortgage costs and accepted that a sharp correction was unlikely. Across NSW, both houses and units recorded solid gains, with regional markets again edging ahead of Sydney on a percentage basis.
In metropolitan Sydney, the story has been one of scarcity, not frenzy. Listings remain well below historic averages and vacancies are near record lows, pushing both prices and rents higher. Demand has broadened from inner-city blue-chip suburbs into more affordable middle-ring areas and transport corridors, with attached dwellings and townhouses attracting strong interest as buyers trade land size for a lower price point. Investor activity has lifted cautiously on the back of stronger yields, but highly leveraged buyers are still constrained by serviceability buffers.
Regional NSW has consolidated its pandemic-era gains rather than giving them back. Lifestyle and commutable centres in the Hunter, Illawarra, Central Coast and key inland hubs such as Dubbo and Narromine have posted new price peaks, underpinned by ongoing capital-city migration, tight rental markets and relatively higher yields.
Policy and credit settings have been central in 2025. The Minns Government’s low and mid‑rise housing policy; opening up medium‑density housing within 800 metres of 171 transport‑rich centres, is starting to shift developer focus, however industry modelling still points to a sizeable state-wide housing shortfall by the end of the decade. At federal level, the expansion of the Home Guarantee Scheme from 1st October; with unlimited places, no income caps and higher price limits, has drawn more first home buyers into outer‑metro Sydney and larger regional centres, yet build costs and planning bottlenecks remain real challenges.
Rental reforms came into force 19th May, with main changes such as ending no-grounds evictions, lengthening notice periods and making it easier to keep pets. Whilst providing more tenant security, there’s landlord uncertainty, with some investors more cautious and considering selling or switching asset classes. There has been no material easing on rents or vacancies.
NSW has also seen an underquoting crackdown with new proposed laws. Changes are still mostly on paper, however the Minns Government announced a package in November, including big jumps in penalties (up to $110,000 or triple commission), mandatory price or price guides on all ads and a Victorian‑style “statement of information” explaining the price estimate.
Enforcement has already ramped up with NSW Fair Trading on an audit blitz across Sydney and regional areas, delivering “please explain” notices and on the spot fines. Despite policy and reforms, the NSW market is still being driven by interest rates, chronic undersupply, population growth and rental scarcity.
The Reserve Bank’s cash rate sits at 3.60% after earlier cuts, with recent upside surprises in inflation reducing the odds of further easing in the near term. This backdrop suggests 2026 is likely to deliver more of the same – tight rental conditions, persistent undersupply and moderate, uneven price growth rather than a boom. Stretched affordability and higher living costs will cap how far and how fast buyers can chase prices. Quality, family-suitable and investment grade stock in both metro and key regional centres, are expected to stay highly contested, while secondary assets and fringe locations will see more measured and increasingly price-sensitive demand.
