2024 was a solid year for Sydney’s property market, even if the pace of growth slowed in some market segments.
We expect to see similar conditions persist as we enter 2025, but over the course of the year, that could well change.
Here are three things buyers and sellers need to know about the property market in 2025.
1. Interest rates may go down but cash buyers are on the rise
After a series of sharp rises that took interest rates from historic lows to decade-long highs, interest rates seemed to have stabilised. Now, most commentators are forecasting interest rate cuts. Some say this could happen as early as February, while the majority are predicting mid-year.
The big four banks forecast the cash rate (currently 4.35%) will end 2025 somewhere between 3.1% and 3.6%. This could help fuel buyer demand and give lagging parts of the market an uplift.
Not that interest rates affect everyone: a trend to watch in 2025 will be the rise of the cash buyer. Data reveals that across the board, over a quarter of all buyers don’t need a mortgage – a significant proportion, which is increasing annually. And our area has among the highest percentage of cash buyers anywhere in the country.
In fact, up to 60% of local property transactions are completed by buyers who don’t need a mortgage.
This partly explains why our local property market has remained so resilient in recent years despite the higher interest rates of the past couple of years. 16 suburbs in Sydney’s East were represented on a list of 101 nationally that made over a million dollars for their owners in the last five years.
2. Affordable housing will be front and centre at the federal election
2025 will be defined by a federal election. And, housing affordability is one issue forecast to be front and centre as the parties go to the polls (just as it was in the last Budget).
Rising property values, high rents, the increased cost of living and interest rates are combining to put pressure on many buyers – especially those upsizing from an apartment to a house or entering the market for the first time.
In an attempt to help, the labour government’s Help to Buy Scheme (part of its last election promise) was passed into law last November, paving the way for more Australians to own their own home.
Eligible applicants will soon be able to co-purchase a home with the government taking up to a 30% stake in the property (or up to 40% for a brand new home).
- The price cap for Sydney will be $950,000, and buyers will also need to be:
- Australian citizens aged at least 18 years of age
- Able to satisfy the financial capacity test and have a yearly income of less than $90,000 (for singles) or a combined income less than $120,000 (if co-purchasing)
- Houses, townhouses and apartments are eligible, but buyers will need to live in the property.
- Buyers cannot currently own any other land or property in Australia or overseas (but they can have owned in the past – making it different from first home buyer schemes).
While $950,000 may not go very far in Sydney’s Eastern Suburbs housing market, it will buy you a good apartment like 223/50 Macleay Street, a fabulous one-bedroom apartment in the famous Rex Building, which makes us think we could see a boom in this more affordable segment of the market once the scheme kicks off in 2025.
3. Buyers are looking for these popular property features
We can tell a lot about what buyers might be looking for in 2025 from their search data. According to the Domain End of Year Wrap 2024 (which looks at Sydney data) and realestate.com.au (which shows NSW data) views, waterfronts, penthouses, studies, garages and swimming pools are all coveted. The top keyword searches from buyers last year were:
| Ranking | Domain | realestate.com.au |
|---|---|---|
| 1 | Pool | Swimming pool |
| 2 | Granny flat | Garage |
| 3 | Waterfront | Air conditioning |
| 4 | View | Ensuite |
| 5 | Study | Outdoor area |
| 6 | Garage | Balcony |
| 7 | Penthouse | Single storey |
| 8 | Duplex | Built in robes |
| 9 | New | Study |
| 10 | Courtyard | Dishwasher |
Domain also highlighted that the keyword “Art Deco” increased in popularity this year, going from 17th to 14th position (in Melbourne it ranked even higher – coming in second place).
Buyers seeking vintage charm and original Art Deco architectural features will find plenty in Potts Point and across the Eastern Suburbs. A great example is 9/81 Elizabeth Bay Road, a stunning Art Deco penthouse currently on the market.
According to realestate.com.au, the keyword that increased the most nationally (up 147%) over 2024 was “New York”, reflecting the popularity of new york-style warehouse style apartments with buyers.
A great example is The Riley in Woolloomoloo where we just sold 715/46-48 Riley Street, a fabulous two-bedroom warehouse apartment in a prime location, for $2.95 million.
In NSW, the term “lock-up-garage” topped the list for the largest increase rising 251%, while “mortgage” (ie: buyers seeking mortgagee sales) was up 190%, and “terrace” increased 148%, revealing the popularity of this housing type, which is common in in Sydney’s inner east.
2025 predictions
CoreLogic expects continued “diversity” in the housing market over 2025. Domain forecasts both apartment and house prices will increase 4% to 6% in Sydney, while realestate.com.au predicts more modest growth of 1% to 4%.
When it comes to the big four banks, NAB, Westpac, CBA and ANZ all expect home values across the capital cities to increase by 3% to 6% next year.
Here in Sydney’s east, we forecast more growth on the horizon. Our view is that certain pockets of the Eastern Suburbs could actually be undervalued – that includes some apartments in inner city areas, as well as beachside suburbs.
We believe that Sydney’s Eastern suburbs property market presents good opportunities for buyers in 2025.
Check out our latest listings and, if you’d like to know more about buying or selling in Sydney’s eastern suburbs, get in touch.
