Inner-City Sydney Property Market Report: 2025 Review and 2026 Outlook

Sydney’s inner-city apartment market continues to demonstrate resilience, depth and a clear preference among buyers and investors for well-located, high-amenity urban living. Across Pyrmont, Barangaroo, Surry Hills and the Sydney CBD, 2025 was defined by steady buyer activity, consistent rental demand and constrained supply in some pockets. As the city moves into 2026, national policy tailwinds, softer lending conditions and improving income growth are set to shape the next cycle. 

With interest rates easing and infrastructure investment reshaping key precincts, inner-city Sydney is entering a new phase of confidence. The data shows a market supported by strong rental yields and sustained appetite from owner-occupiers, downsizers and long-term investors. 

Market Conditions in 2025: Low Listings and Stable Values

Throughout 2025, new listings remained low across the major inner-city precincts. Pyrmont recorded 18 new house listings and 191 new unit listings for the year, maintaining its reputation as a tightly held, owner-occupier-led suburb. Surry Hills saw similarly limited stock with 92 new house listings and 226 new unit listings. Barangaroo, a prestige micro-market, recorded just 35 new listings across the year, reinforcing its exclusivity and low turnover. 

Limited supply underpinned price stability in some pockets of the market. Median unit values in the Sydney CBD sat at $924,000, while Pyrmont’s median unit value reached $1.1 million. Surry Hills continued to attract buyers prioritising lifestyle and walkability, reflected in a median house price above $2.4 million. 

Auction activity remained solid. Auction data for 2025 showed Sydney metro clearance rates held at 63 per cent late in spring, with October campaigns achieving an effective 81 per cent clearance once post-auction sales were included. This consistency highlights genuine buyer depth despite broader economic uncertainty. 

Rental Market Tightness: High Demand Across All Precincts

The inner-city rental market remained extremely competitive in 2025. Strong demand, limited investor turnover and a slow pipeline of new completions contributed to rental pressures across all four suburbs. 

Barangaroo recorded some of Sydney’s highest weekly asking rents across its luxury apartment stock including One Sydney Harbour and Crown Residences. Pyrmont and Surry Hills attracted steady demand from professionals seeking high-amenity living close to transport and employment hubs. In the Sydney CBD, vacancy remained low, with sustained interest from international returnees, executives and long-term renters. 

Domain’s national outlook forecasts rents to reach new record highs by late 2026, driven by rising incomes, strong population fundamentals and a gradual but slow improvement in supply. For investors, these conditions reinforce the long-term value proposition of inner-city apartments, particularly in buildings with strong amenity and premium positioning. 

Suburb Insights

Barangaroo

Barangaroo remains one of Sydney’s most exclusive residential precincts, defined by luxury waterfront living, architectural excellence and exceptionally low supply. The suburb’s population has grown modestly since 2016, supported by high-income professionals and a strong base of owner-occupiers and substantial redevelopment of the area. Median unit values sit above $4 million, with tightly held stock and strong demand ensuring resilient pricing. Its appeal to executives, expatriates and downsizers reinforces its role as a prestige micro-market. 

Pyrmont

Pyrmont continues to appeal to professionals and long-term owner-occupiers, retaining a stable population of more than 12,500 residents. With an average ownership length of 15 years, the suburb is characterised by loyalty and low turnover. Median unit values around $1.1 million reflect strong buyer competition, while its village atmosphere, harbour walks and proximity to Sydney CBD sustain steady rental activity. 

Surry Hills

Surry Hills remains a consistently performing lifestyle suburb. Its combination of heritage terraces, creative energy and evolving café culture continues to attract owner-occupiers and renters who value character and convenience. With median house values above $2.4 million and unit medians around $920,000, the suburb has demonstrated strong resilience and renewed momentum heading into 2026. 

Sydney CBD

Sydney CBD remains a diverse and increasingly sophisticated apartment market. With more than 15,000 dwellings, the CBD attracts younger professionals, seasoned investors and a growing segment of downsizers prioritising luxury, walkability and low-maintenance living close to theatres, dining and transport. 

One of the most significant catalysts for the luxury CBD market’s next growth phase is the upcoming completion of One Circular Quay in 2026. Positioned on one of the most coveted waterfront sites in Australia, the development is expected to elevate the CBD’s premium offering and attract high-end buyers seeking exclusivity, amenities and direct connection to the harbour. Its arrival will strengthen the CBD’s position as a residential destination, not just a commercial hub, and support continued demand for luxury apartment living. 

2026 Forecast: Momentum Followed by Moderation

According to Domain’s 2026 Forecast Report, Sydney is expected to lead the nation in house price growth next year. Forecasts indicate a 7 per cent rise in house values and a 4 per cent rise in unit values. Several forces are shaping this outlook:

• Lower interest rates, with 75 basis points of cuts already delivered in 2025
• Expansion of the First Home Guarantee Scheme, enabling purchases with a 5 per cent deposit
• Gradually improving household incomes
• Tight listing volumes across the combined capitals
• Strong rental demand and steady migration 

The first half of 2026 is expected to show the strongest momentum, with growth moderating in the second half as affordability constraints re-emerge. 

What This Means for Buyers, Sellers and Investors 

For buyers, early 2026 offers a strategic window before price pressures rebuild. For sellers, low listings and consistent buyer depth continue to create favourable selling conditions. For investors, tight vacancy, rising rents and strong long-term fundamentals support the value of high-quality apartments in blue-chip urban precincts. 

At Ayre Real Estate, we specialise exclusively in Sydney’s inner-city apartment market. We’re for apartments, and we’re for helping our clients move with confidence. If you are considering your next step in Barangaroo, Sydney CBD, Pyrmont or Surry Hills, our team is here to guide you with clarity, strategy and deep local expertise.