Sydney Housing Market Update [video] | September 2025

Sydney’s property market is showing no signs of slowing down as we head into spring. The latest data from September 2025 reveals a market characterised by rising values, strong buyer demand, and incredibly tight stock levels. For both prospective buyers and sellers, understanding these dynamics is key to navigating the bustling months ahead.

The national housing market has seen its most significant monthly gain since May of last year, and Sydney is a key player in this upward trend. Let’s delve into the specifics of what’s happening in the Harbour City.

Sydney Property Values on the Rise

Home values in Sydney have continued their upward trajectory, with a notable 0.8% increase in August alone. This consistent growth has contributed to a 3.3% rise in dwelling values over the first eight months of the year.

A key trend in the Sydney market is the widening gap between house and unit values. The median house value is now a staggering 74% higher than the median unit value, and this gap continues to grow.

• Houses: Values increased by 0.9% in August and are up 2.9% over the year.
• Units: Saw a more modest 0.6% rise in August and have remained unchanged over the past 12 months.

This divergence highlights the strong demand for detached housing in the current market.

The Story of Supply and Demand

The primary driver behind Sydney’s rising property values is the classic economic principle of supply and demand. A recent series of rate cuts, coupled with growing consumer confidence and real wage growth, has spurred a significant increase in buyer demand.

However, the supply of available properties has not kept pace.

Advertised stock levels in Sydney remain tight, tracking 7% lower than the same time last year and 3% below the five-year average.

This scarcity of available homes is creating a sense of urgency among buyers and fueling competition.

With more buyers vying for fewer properties, vendors are finding themselves in a favourable position. This is reflected in the strong auction clearance rates, which climbed to 70% in late August – the highest they’ve been since February of last year.

What’s Happening in the Rental Market?

The rental market across Australia is also experiencing tight conditions, and Sydney is no exception. The national rental index saw a significant 0.5% increase in August, and the national vacancy rate is hovering at a near-record low of 1.5%.

This re-acceleration in rental growth is a trend to watch, as the rising cost of rent could have broader implications for inflation.

Key Sydney Property Market Statistics

Source: Cotality Australia

What Lies Ahead?

The outlook for the Sydney housing market appears increasingly positive. However, there are some factors that may temper the pace of growth. Stretched housing affordability remains a significant hurdle for many, and elevated levels of household debt, a focus on prudent lending standards, and normalizing population growth are all likely to play a role in keeping the market in check.

Despite these potential headwinds, all signs point to an active and competitive spring selling season in Sydney. Buyers and sellers alike should be prepared for a dynamic market in the months to come.

The Sydney property market remains fundamentally strong, but its trajectory for the remainder of 2025 is set to be one of modest, sustainable growth rather than a speculative boom. As Tim Lawless concludes, the broader outlook suggests that:

The tailwinds of lower interest rates, higher confidence, and low housing supply are likely to outweigh the headwinds, providing the foundations for further modest growth in housing values in 2025.

For buyers, sellers, and investors, the key will be navigating the distinct performance of the house and unit markets and understanding that while conditions are improving, affordability will remain the ultimate gatekeeper of market growth.