Top 10 Real Estate Articles for Sydney January 2025

As Australia navigates the complexities of its property market in 2025, several key trends and predictions are emerging. House prices have been affected by high mortgage rates, rising costs, and shifting buyer preferences, causing fluctuations in various suburbs across the country. While some regions continue to see price increases, others are experiencing significant declines, making the landscape for potential buyers and investors particularly unpredictable. This article examines the latest reports and expert opinions to understand where the market is headed in the coming months and what it means for homeowners and landlords alike.

Home Renovations in 2025: A Mixed Outlook

https://www.domain.com.au/news/doing-a-home-reno-has-been-gruelling-this-year-thats-set-to-change-1344163/

Home renovation activity is expected to increase in 2025, with the potential for interest rate cuts making projects more financially viable. However, homeowners will still face challenges, including the ongoing shortage of skilled tradespeople and high construction costs. While material prices are predicted to rise at a rate in line with the Consumer Price Index (CPI), they are not expected to spike as they have in recent years. The shortage of tradies, compounded by strong demand from both residential and large infrastructure projects, remains a significant hurdle. Despite these issues, experts are optimistic about the renovation market, with the potential for more competition in the construction industry, especially if the economy improves and more builders enter the market.

Brookvale Oval, with Sydney CBD in the background

University of Sydney

The Housing Affordability Dilemma: Price Falls or Economic Damage?

https://www.domain.com.au/news/house-prices-have-been-falling-but-it-might-not-be-enough-1344410/

House prices in Sydney have fallen, but not enough to significantly improve housing affordability, which remains at historic lows. While experts agree that lowering house prices would make housing more affordable, this approach is politically unpopular, as it would hurt current homeowners, particularly those with mortgages. Some economists argue that a significant reduction—around 30%—in house prices could align housing metrics with international norms, improving affordability for younger buyers and renters. However, such a dramatic price drop would likely harm the broader economy. Policy makers face a tough challenge, with many reluctant to implement changes that could negatively impact a large proportion of voters who are homeowners. Instead, some propose increasing housing supply through rezoning and density increases in urban areas as a more sustainable solution.

Rising Rents Could Delay Homeownership by Decades

https://www.domain.com.au/news/average-renter-may-take-65-years-to-save-for-deposit-if-rent-rises-continue-1344131/

According to new analysis from the Parliamentary Budget Office, continued rent growth at current rates could make homeownership a distant dream for many renters in Victoria. If rent increases persist at the historically high rate seen in 2022-23 (12.4%), it could take the average renter up to 65 years to save for a 20% home deposit, far longer than the typical 8.3 years seen with more moderate annual rent growth of 4%. By 2030, renters could spend nearly 20% of their income on rising rental costs, significantly eroding their ability to save for a deposit. The research has spurred calls for rent control measures, with the Victorian Greens advocating for policies to cap rent growth, such as limiting increases to inflation, to help make homeownership more attainable for future generations.

Rent Growth Slows, But Affordability Crisis Continues

https://www.smh.com.au/property/news/landlords-could-once-increase-rents-sharply-that-s-changed-20250114-p5l42w.html

After years of rapid rent increases, the pace of growth has slowed slightly, offering some relief to tenants. In 2024, the median national rent rose by 4.8%, down from 8.1% in 2023, marking the slowest increase in several years. While this is seen as a sign that the peak of the rental boom has passed, rents remain unaffordable, with tenants on median incomes now spending 33% of their pre-tax income on rent—the highest proportion ever recorded. While Sydney and Melbourne have seen marginal declines in rents, other cities like Perth and Brisbane are still experiencing significant rises. Despite the slowdown, tenant advocates argue that small rent decreases are insufficient to alleviate the ongoing housing stress and highlight the need for stronger protections for renters, especially as the market stabilises.

National Rental Market Shows Signs of Easing

https://www.therealestateconversation.com.au/news/2025/01/15/national-rental-market-has-well-and-truly-passed-the-peak-corelogic/1736913594

The national rental market is showing signs of cooling after a period of rapid growth, with rental prices rising by just 0.4% in the December quarter, the smallest increase for that period since 2018. In 2024, rents rose by 4.8%, down from 8.1% in 2023, indicating that the market has likely passed the peak of the recent rental boom. CoreLogic economist Kaytlin Ezzy highlighted that affordability remains a major issue, with renters now spending a record 33% of their pre-tax income on the median rent. Factors such as eased overseas migration, increased investor participation, and larger household sizes have contributed to softer rental demand, resulting in more rental stock and slightly higher vacancy rates. Despite these improvements, rents remain high in many areas, with Sydney maintaining the country’s most expensive rental market.

Sydney’s New Suburbs: Affordable but Unlivable for Young Generations

https://www.smh.com.au/national/nsw/forget-the-latte-line-this-is-the-new-divide-splitting-sydney-in-two-20250109-p5l33j.html

Sydney’s younger generations are unhappy with the city’s new suburbs, criticizing them for being poorly designed and unsustainable. Suburbs like Marsden Park and Austral are seen as “grey” and lacking in character, with little consideration for long-term livability. Architecture student Amanda Eessa and urban cooling expert Sebastian Pfautsch argue that these areas suffer from rising heat, poor transport links, and inadequate green spaces.

Despite the criticism, young professionals like engineer Darcy Elton see these suburbs as an affordable option, though they worry these areas won’t appreciate in value like older Sydney properties. With concerns over cheap construction and homogenous designs, many fear these new developments won’t stand the test of time, posing long-term problems for Sydney’s housing market.

Sydney House Prices Struggle Amid High Mortgage Costs

https://www.domain.com.au/news/taken-a-toll-sydney-house-prices-buckle-under-high-mortgage-costs-2-1344783/

Sydney house prices saw back-to-back declines for the first time in two years, with the median house price dropping $1,300 in December. Despite the dip, the median price remains unaffordable at $1.65 million.

Dr. Nicola Powell from Domain noted that high interest rates and limited borrowing capacity are shifting the market towards buyers, leading to more listings and longer days on the market. Meanwhile, unit prices rose slightly due to demand for more affordable options.

Regions like the Inner West and Baulkham Hills experienced significant price drops, driven by slow wage growth and rising living costs. Experts predict further price declines unless interest rates are cut soon, with many buyers waiting for more favourable conditions.

Many buyers, like Michael Lagudi and his wife, have struggled to find affordable homes, eventually settling in Baulkham Hills after being priced out of other areas.

Sydney, Melbourne, and Brisbane Suburbs Lose Million-Dollar Values in Three Months

https://www.domain.com.au/news/falling-property-prices-suburbs-lose-their-1-million-2-million-3-million-values-in-3-months-1346627/

Several suburbs in major cities across Australia have seen median property prices drop out of the $1 million, $2 million, and $3 million markets, with some losing up to $300,000 in just three months, according to Domain’s latest data.

In Sydney, areas like Centennial Park and Kensington saw units drop below the $1 million mark, while Mascot and Oatlands fell below $2 million. Haberfield, once a $3 million suburb, also saw a sharp decline.

The downturn is partly due to higher interest rates and changing economic conditions, particularly in premium markets like Sydney and Melbourne. In Mascot, where prices fell by 5.2% over the year, agents say misaligned pricing has led to homes selling for less than expected.

Slow Growth Predicted for Australian House Prices in 2025

https://www.domain.com.au/news/where-house-prices-will-rise-fastest-during-2025-1347871/

House prices across Australia are expected to grow by just 3.3% in 2025, with units seeing slightly higher growth at 4.6%, according to a KPMG forecast. Sydney and Melbourne’s property markets are forecast to be sluggish, with price increases of 3.3% and 3.5% for houses respectively, while Brisbane and Perth are projected to see faster growth of 3.1% and 4% for houses.

The slower pace is attributed to high interest rates and reduced borrowing capacities, leading many buyers to hold off. KPMG’s chief economist, Dr. Brendan Rynne, warned that even with anticipated rate cuts, the relief on mortgage repayments would be minimal and unlikely to significantly boost market activity.

Despite some forecasts predicting higher growth, Rynne highlighted that the ongoing housing supply shortage and high prices are key issues. He stressed the importance of increasing housing supply to address Australia’s long-standing affordability crisis.

ATO Targets $1B+ From Landlords in Crackdown on Undeclared Rental Income

https://www.domain.com.au/news/the-atos-new-move-to-claw-back-more-than-1b-from-dodgy-landlords-2-1347527/

The ATO is ramping up its data-matching program to recover up to $1.2 billion in unpaid taxes from landlords who fail to declare rental income or misreport earnings. The tax office will now cross-reference bond data from across the country with landlords’ tax returns to identify discrepancies.

This initiative follows successful data matching in the 2022-23 financial year, which helped raise $23 million in revenue from around 5,600 taxpayers who had not correctly reported their rental properties. Tax experts warn landlords who haven’t declared all rental income could face hefty fines and interest charges in addition to repaying the taxes owed.

Landlords are encouraged to review their tax returns and proactively disclose any issues to the ATO before they are contacted to avoid penalties. Tax communication director Mark Chapman highlighted that the ATO is closely monitoring the sector, and landlords should ensure they’re in compliance to avoid costly repercussions.

Conclusion:

In conclusion, Australia’s property market in 2025 will likely experience modest growth, with some areas seeing price increases, particularly in units. However, high mortgage rates, affordability challenges, and the ongoing economic uncertainty will continue to affect the market. While there are pockets of opportunity for buyers and investors, the overall picture remains subdued, and it’s clear that careful consideration and professional advice will be crucial for anyone looking to navigate the housing sector this year.