Following a strong resurgence in 2024, with total sales volumes reaching $300.6 million, up 25.7 per cent year-on-year, the early data for 2025 is revealing a significant shift in investor preferences, transaction activity, and yield expectations.
“Western Sydney has rapidly become the investment hotspot in the metropolitan market,” said Peter Vines, director of RWC Western Sydney.
“After years of dominance by the Eastern Suburbs, we’re now seeing savvy investors chase stronger returns, population-driven demand, and long-term growth fundamentals that only Western Sydney can offer.”
The early months of 2025 show Western Sydney outpacing traditional blue-chip markets, thanks to a mix of resilient yields, ongoing housing undersupply, and population expansion.
Meanwhile, regional markets have also seen a dramatic shift in capital inflows, growing from just 4.5 per cent of NSW transaction volume in 2024 to 31.2 per cent so far this year.
“This shift is more than just about affordability; investors are recognising the long-term value in growth corridors across Western Sydney and key regional centres,” Mr Vines said. “Many are looking beyond short-term yields and are targeting assets with reconfiguration, strata, or development upside.”
“Importantly, many unit blocks in these areas are transacting at prices below replacement value - a compelling proposition for investors seeking value with future upside.”
Vacancy rates support this trend, with Inner Sydney climbing to 2.9 per cent in March 2025, while middle and outer ring areas remain tightly held at 1.5 per cent and 1.6 per cent respectively. A slowdown in new unit construction, combined with sustained population growth, continues to underpin demand.
At the same time, rental growth has resumed its upward trajectory. After remaining flat throughout 2024, the median weekly rent has jumped to $720, with two-bedroom units in outer suburbs recording a 19.2 per cent year-on-year surge, more than quadruple the growth of other configurations.
“This data tells us a clear story: renters are prioritising affordability and space,” Mr Vines said. “Outer ring two-bed units are proving incredibly popular, driven by the rise in shared living arrangements and pressure on central markets.”
Despite the higher financing environment, block of unit yields have remained stable, averaging 5 per cent in 2024 and inching up to 5.28 per cent in early 2025, demonstrating their strength relative to other commercial sectors which have experienced yield softening.
“Unlike office or retail, this sector is proving itself as a reliable performer across interest rate cycles,” Mr Vines said. “With more rate cuts expected this year, we anticipate an increase in buyer competition, making now a pivotal time for acquisition.”
