Back in 2024, the annual Demographia International Housing Affordability Report revealed that Sydney’s housing market is the second-most unaffordable in the world. And while we can’t confirm that our position as one of the most difficult cities to buy a home will shift in 2025, we do have some good news to share. The property website Domain has just released its 2024 End of Year Wrap and 2025 Outlook, and Sydney’s property market is set to soften. Though house and unit prices are still projected to rise slightly over the next 12 months, the rate of growth is projected to slow compared with last year, and a number of factors should make getting on the property ladder easier for first-time buyers.
According to Domain, property market growth across Australia is on track to slow down over the next year, with Sydney and Melbourne set to see the most noticeable impact. The property experts at Domain expect these changes to impact first-time home buyers most significantly, with Domain’s Chief of Research Dr Nicola Powell explaining, “Although it’s been a tough ride, 2025 presents a real opportunity for first-time buyers. The key is identifying the right property and location to get onto the property ladder.”
One of the key factors set to impact Sydney’s property market this year is housing market incentives. To help improve affordability for first-time buyers, the government has introduced schemes that encourage them to rent out spare bedrooms without penalties, helping ease mortgage payments. Here in NSW, other government incentives and initiatives to support first-time buyers include the First Home Buyers Assistance scheme, the First Home Owner (New Home) Grant and Help to Buy scheme, which went through the Senate in late 2024, and is slated to start this year.
Another factor set to benefit first-time buyers this year is the projected rise in unit prices. According to Domain, unit prices in Sydney are set to rise by four to six per cent over the next 12 months, with first-time buyers purchasing units this year set to benefit from the capital gains made.
“First-time buyers who act early will benefit from this capital growth in the years ahead,” Dr Powell says.
The team at Domain also predicts that interest rates will be cut later in the year, pushing prices up in the later quarter – meaning if you’re ready to buy, it’s worth acting fast.
Last year, Domain released its First Home Buyers report – which calculated the average time it takes for a couple aged between 25 and 34 to save a 20 per cent deposit for an entry-priced property. For Sydneysiders, this timeframe sat at six years and eight months for a house, and four years and six months for a unit. Let's hope that the projected softening of the market means that the timeframe shrinks over the next 12 months – though if you’re going by the advice from Domain, it’s worth acting fast.
In the meantime, get saving with our readers’ tips on saving money in Sydney, or hit one of the best happy hours in the city for an affordable after-work session.
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