Challenges, change and opportunity were hallmarks of the 2024 Sydney real estate market.
While these will by and large remain over 2025 to varying degrees, there will be some clear trends that emerge over the course of the year.
These will be driven by national economic policy, lifestyle trends and a changing cultural mindset.
The shifts will not only impact those in the Sydney market, including agents, but those nationally.
With Sydney arguably the most closely watched property market in Australia, movements often gather nation-wide attention.
In my experience, Sydney tends to be the most reactive property market too and continues to demonstrate just how quickly it can shift in favour of either buyers or sellers.
This means that what we experience locally can provide insight for those in other states, as to the impact these trends will have on their local communities, if and when they materialise.
Here are the top five trends over 2025 and the moves buyers and sellers make in the country’s most competitive real estate market.
1. A closer relationship between property, politics, and the economy
The inextricable link between property, politics, and the economy will cement itself this year. Real estate is set to be a battleground in this year’s federal election, driven by the cost-of-living crisis and the ongoing challenges surrounding housing affordability.
That means we must be prepared for the debate to become more heated. We’ll also see the debate start to involve voices of young Australians who are the next generation of homeowners, investors and tenants.
I feel this is an important step in us as a state being able to formulate and implement solutions that are going to have a meaningful and long-term positive impact.
As we’ve seen in past election years, the announcement of pre-election policies can have a powerful impact on sentiment and perception in the local communities too.
The fact that these impacts are felt on both a macro and micro level (well before any policy change is enacted) confirms just how interdependent this relationship has become.
Interest rates will perhaps be the most influential economic force in the market this year.
While the Sydney real estate market has remained resilient in the face of this, homeowners are under immense pressure that in more cases than not is simply unsustainable financially.
It’s not clear yet when interest rates will begin to pare back (some economists are tipping a cut as early as next month following a continued downtrend in recent inflation data), but we expect that when it’s announced, there’ll be an almost immediate lift in buyer optimism and engagement.
We do however expect this to be more of a short burst of energy as opposed to a substantial shift if rate cuts are not sustained over the coming months.
2. Multi-generational money
Property will remain a family affair over 2025, with the continuation and evolution of the ‘bank of mum and dad’.
Expect to see it evolve over the course of this year from what has previously been a transaction between parents and their adult children, to a gift or loan from grandparents and even extended members of family. Results from a recent UBS report demonstrated this too.
It’ll also expand beyond the purchase of entry-level properties, traditionally under $1 million, to those in a higher price range to support the move into a family home or young professionals upsizing in line with their requirements.
This is significant because it’ll be the first time we’ve seen this level of multi-generational involvement in buying a home.
It’s absolute proof that there’s a national understanding of the challenges with affordability, estimated to be at its worst level since 2008.
It also demonstrates our cultural and societal response to ensuring that home ownership is viable for the current generation.
3. Increase in ‘rentvesting’.
Rentvesting is where a buyer purchases an investment property in one geographical area and rents in another.
We expect to see more of it in 2025, driven by the economic climate and the importance of lifestyle and accessibility for the current cohort of buyers.
While the $40+ billion of transport and infrastructure projects slated for Sydney over the next four years will play a role in a more connected city, it’s simply not feasible for a great deal of people to live some 30 kilometres or more from the CBD now.
As such we see the strategy of rentvesting most common among tenants across the lifestyle areas such as the Eastern Suburbs, the Inner City and the Inner West.
The suburbs they tend to invest in include Western Sydney, the Hornsby Shire or the Sutherland Shire.
It’s important to note that the viability and sustainability of this strategy is largely dependent on the buyer being able offset some of their mortgage and rental payments through the income generated from the investment.
All in all, another trend that’s reflective of how the current economic climate is impacting owners, investors and tenants.
We should stay mindful that many of the financial pressures shared by one group are also shared by another.
4. A new frontier for sustainability and wellness
What used to be more of a trend has become a must-have for many Sydneysiders. Expect to see the evolution of sustainability and wellness this year in two main ways: The first being an increase in the rate at which it influences the design, build or renovation of new and existing homes, and secondly, how important it is to buyers.
Take portable saunas for example – a trend that the AFR recently reported on as growing in popularity across Sydney, and just one reflection of the increased importance of accessibility and convenience.
This is also encouraging a move towards smaller homes and apartments enjoying what was more commonly reserved for higher-end homes – features like electric vehicle chargers, the standardisation of energy-efficient appliances, and smart home technology systems.
It’s possible that sustainability and wellness in homes will play a role in driving premium prices over 2025 too.
5. Shifting seasons
In a prosperous economic climate we’d expect to see property market activity follow the more traditional seasons of buying and selling.
This isn’t the case anymore and expect to see more year-round transactional activity in 2025, as we did in 2024.
It’s all due to the fact that those who are buying or selling are doing so when they’re able to financially.
It’s highly likely that after the first interest rate cut announcement in 2025, we’ll see a spike in activity that will further reflect the move away from peaks only happening at specific points in the year.
The fact that there was healthy buyer demand to support the majority of these sales across various months in 2024, even as late as mid-December, reflects that there are genuine opportunities for both buyers and sellers in the current Sydney marketplace.
What these trends mean for agents
One of the things we talk about at BresicWhitney is the difference between ‘product knowledge’ and ‘market knowledge’ and why those looking to make a move need both, not simply one or the other.
This is also important for agents. By being an expert in your local community, and by having an understanding and appreciation of the macroeconomic conditions and pressures, you’ll be able to better guide buyers and sellers to suitable, mutually beneficial outcomes.
This is something that’s even more important when you remember the huge number of buyers that eventually become sellers and how important trust and integrity are in our field.
I’d love to hear your thoughts on whether you agree with our predictions.
