Despite continued speculation around falling property prices and rising living costs, Sydney’s housing market has once again surprised the sceptics. CoreLogic reports that median home values in Sydney have risen for the second consecutive month—bucking forecasts of prolonged decline.
Between late 2020 and the end of 2021, Sydney’s property market surged, with median values jumping 27.7% in just 15 months. The subsequent correction saw prices fall by -13.8% between January 2022 and January 2023, triggering fears of a steeper downturn. Some analysts even projected a 30% peak-to-trough drop, followed by further declines in 2024.
But the data tells a different story.
Sydney’s median dwelling price has risen by 1.7% over the past two months. In this article, we explore seven key reasons why the Eastern Suburbs—and Sydney more broadly—are proving more resilient than expected.
1. Low Listings Are Driving Up Prices
Property prices are shaped by supply and demand. While buyer demand is no longer as feverish as in 2021, available stock has shrunk even faster. We’re in a low-supply environment that continues to put upward pressure on prices.
According to SQM Research, there were nearly 10,300 fewer properties listed in Sydney in February 2023 than in February 2021—a staggering 29% reduction. This limited stock continues to constrain buyer choice and support higher prices.
2. Sydney Has a Housing Shortage—Full Stop
The housing shortage isn’t just about fewer listings—it’s structural. Sydney’s population continues to grow, particularly with high levels of migration, a record return of international students, and long-term visa holders settling in inner-city suburbs.
The Eastern Suburbs, with its access to jobs, lifestyle, and infrastructure, is one of the most supply-constrained pockets in the country. Across all price points, from entry-level apartments to prestige homes, demand continues to exceed supply.
3. Rental Market Tightness is Fueling Investor Demand
As property prices dipped in 2022, rents surged. SQM Research reported a 23.1% rise in Sydney’s median rent that year, reaching $714. In 2025, rents have risen another 9.1%, bringing the median to approximately $779 per week.
This has improved gross rental yields. CoreLogic now places the median apartment yield in Sydney at 4.1%, up from 3.0% in early 2022—making Sydney property more attractive to investors seeking income and capital growth.
4. Interest Rate Fears May Have Peaked
While the Reserve Bank of Australia delivered a series of interest rate hikes between May 2022 and early 2024, the decision to pause in late 2024 helped ease buyer anxiety. Market sentiment improved, and buyers previously sitting on the sidelines returned.
Even with further modest hikes in 2025, buyers appear more financially prepared and less reactive than during the initial phase of tightening.
5. The Prestige Market Hasn’t Missed a Beat
Rising interest rates have done little to slow the top end of the market. In fact, Sydney’s luxury segment—particularly in suburbs like Vaucluse, Point Piper, and Bellevue Hill—has seen off-market transactions and record-breaking sales continue unabated.
Downsizers, cashed-up buyers, and returning expats are driving demand for oversized, high-spec apartments and homes. The problem? There simply aren’t enough of them.
6. Renovation Costs Have Soared
For buyers weighing up renovation versus relocation, skyrocketing construction costs have shifted the balance. Labour shortages, material price hikes, and delays have made large-scale renovations more difficult—and more expensive—than ever.
ABS data shows construction input costs rose sharply, with materials like timber and joinery increasing by over 5% in just one quarter. Wait times for skilled trades have blown out to over 18 months in some areas, pushing many to buy move-in-ready homes instead.
7. Last Year’s Price Drops May Have Overshot
Markets often overcorrect. Just as buyers become overly optimistic in a boom, they can turn unnecessarily pessimistic during downturns. It’s increasingly clear that last year’s correction was driven by sentiment as much as fundamentals.
As confidence returns and economic conditions stabilise, the market is recalibrating—not crashing. For buyers, today’s prices—still down roughly 10% from peak—offer compelling long-term value in a structurally undersupplied market.
Looking Ahead: Opportunity for the Informed Buyer
Sydney remains a high-demand, low-supply housing market—especially in the Eastern Suburbs. For those considering a move, the current window represents a rare alignment of moderate prices, improving yields, and a stable interest rate outlook.
If you’re thinking of buying or selling in Sydney’s Eastern Suburbs, now is the time to act with strategy and insight.
Get in touch—I’d be happy to help.
