M:
Research
Spring/26 Sydney New Apartments
Headlines Sydney new apartment pipeline to 2029 is 37% lower than the 5-year average. There are 8,578 new apartments due for completion in 2026.
The number of residential rental homes in Sydney is currently undersupplied. Sydney rental vacancy was recorded at 1.8% at the end of Q2/26.
New apartment prices were 1.3% higher in Sydney over the past year to Q2/26, at an indicative $16,100/sqm, with -0.6% growth taking place in the last quarter.
Residential rents across Sydney trended 6.2% above last year's weekly rate, with rents forecast to rise 5% by the end of 2026.
Sydney residential property prices have trended higher than a year ago with 3.1% growth, with -9% price growth forecast for 2026.
The construction delivery of new homes in NSW was 1.5% below a year ago, whilst the cost to build in Sydney escalated 4.6%.
Lillis Place (Cammeray NSW)
Economy Key drivers
Interest rate
Spring/26
4.60%
Interest rates were last set at 4.60% after the Reserve Bank of Australia (RBA) lifted the cash rate target by 25 bps in September 2026. At this time, most lenders adjusted their mortgage lending rates for homeowners and investors accordingly. By setting borrowing costs, interest rates strongly influence both housing affordability and demand for home loans. Westpac forecasts the cash rate target to be 4.60% at the end of 2026 whilst 4.10% in 2027, with inflation, energy costs and the global economy being closely monitored as a leading indicators for any possible adjustments during this time.
Population growth
4.1%
Unemployment
Sydney's unemployment rate of 4.1% at the end of Q2/26, was tracking lower than the Australia average at 4.3%. Looking back, the five year average unemployment rate has been 3.9% across Australia. Employment conditions shape the ability for a household to enter the housing market and service mortgages over time, with a healthy labour market typically below 5%. With economic headwinds and technological disruption to a growing number of industries on the horizon, the RBA forecasts unemployment to soften to 4.7% by the end of 2027.
+1.4%
+4.6%
New build costs
Population growth has ramped up housing demand, placing pressure on existing housing supply and infrastructure. Sydney's total population growth was 1.4% in 2025. This came after the population rebounded 1.9% in 2024, after growth had slowed to 1.0% in 2022, as a consequence of slower migration throughout the pandemic. The Australian Bureau of Statistics (ABS) have projected the long-term population growth for Sydney at 1.4% per annum.
The construction delivery of new homes in NSW was 1.5% below the last reported year, whilst residential building approvals trended 6.0% higher. Over this time, Sydney house approvals were up 9.8% and apartment approvals were 2.7% higher. The cost to build in Sydney escalated 4.6% in 2025 according to WT, which was below the 5.5% five year average. Considering the economic outlook, WT forecasts building escalation to lift by 4.8% in 2026 and rise 4.2% in 2027.
Economic outlook, Q2/26
2021
2022
2023
2024
2025
2026F
2027F
Interest rate target
0.10%
3.10%
4.35%
4.35%
3.60%
4.60%
4.10%
Economic growth in Australia
4.9%
3.3%
1.3%
1.2%
2.6%
1.5%
1.7%
Unemployment rate in Australia
4.0%
3.3%
3.8%
3.8%
3.9%
4.7%
4.7%
Population growth in Sydney
1.0%
2.7%
1.9%
1.4%
1.4%
1.4%
1.4%
Building cost escalation in Sydney
6.0%
6.5%
5.2%
5.0%
4.6%
4.8%
4.2%
Source: McGrath Research, RBA, WT, ABS, Westpac
2
New apartment pipeline Update
Active pipeline
Spring/26
-37%
Total number of new apartments Sydney, built or due to be completed
The Sydney annual average pipeline for new build-to-sell apartments due for completion between 2026 and 2029 is trending 37% lower than the 5-year average, according to McGrath Research. The pipeline has been based on the average time taken for the marketing and construction of development approved projects with 6+ apartments and 3+ storeys in height. Sydney is projected to deliver 37,928 new apartments by the end of 2029, averaging 9,482 apartment completions per year. In 2026, there are 8,578 apartments expected to be completed. Between 2021 and 2025, a total of 60,009 apartments were built, with an average 12,002 per year.
Source: McGrath Research
Apartment configurations
53%
New apartments bedroom mix Sydney, built or due to be completed
When exploring the configurations of the Sydney active new build apartment pipeline due for completion between 2026 and 2029, 53% are proposed to be 2-bedroom apartments, 23% having 1-bedroom, 1.8% being studios, whilst 20% are allocated as 3-bedrooms and 1.6% with 4-bedrooms or more, according to McGrath Research. By comparison over the past five years, the split of apartments built were reported to be 54% as 2-bedrooms, 26% had 1-bedroom, 2.6% were a studio, whilst 16% had 3-bedrooms and 1.1% recorded 4-bedrooms or more.
Source: McGrath Research
Sydney, Q2/26
Inner suburbs
Middle suburbs
Outer suburbs
Sydney
New apartments built 2021-2025, annual average
3,165
5,542
3,295
12,002
New apartments built 2026-2029, annual average
2,188
3,826
3,468
9,482
Share of 2-bedroom apartments, due 2026-2029
47%
54%
57%
53% Source: McGrath Research
3
New apartment prices Update
New apartment prices
Spring/26
+1.3%
Tracking new apartment average prices Sydney, per square metre
Apartment prices in new projects within Sydney were 1.3% higher over the past year to Q2/26, with -0.6% growth taking place in the last quarter, according to McGrath Research. New apartment prices were at an indicative $16,100/sqm, ranging between an average of $5,500/sqm and $35,000/sqm for a project with 6+ apartments and 3+ storeys. Over the past five years, total price growth for new apartments was 21.1% higher, with an annual average change of 3.9%.
Source: McGrath Research
Average price per square metre
$16,100
Range of new apartment average prices Sydney, per square metre, Q2/26
The inner suburbs of Sydney saw the strongest growth in new apartment prices in the year ending Q2/26, according to McGrath Research. Prices in the inner suburbs increased 3.9% to an indicative $21,300 per square metre during this time, to range between an average of $14,000 and $35,000/sqm. Outer suburbs recorded a rise in prices of 2.3% with $8,800/sqm ($5,500 to $13,500/sqm) and the middle suburbs fell 1.5% to $13,000/sqm, ranging from an average of $6,500 to $25,000/sqm.
Source: McGrath Research
Sydney, Q2/26
Inner suburbs
Middle suburbs
Outer suburbs
Sydney
New build apartment average price/sqm
$21,300
$13,000
$8,800
$16,100
Change from a quarter ago
0.0%
-0.8%
0.0%
-0.6%
Change from a year ago
3.9%
-1.5%
2.3%
1.3% Source: McGrath Research
4
Established residential prices Update
Median price
Spring/26
$1,260,700
Tracking median prices Sydney
Sydney residential property prices have trended higher than a year ago. Prices across Sydney rose by 3.1% in the year ending Q2/26, with a 2.9% decrease recorded in the most recent quarter. As a result, the median residential value reached $1,260,700. Residential values shift with changes in interest rates, supply and demand, economic conditions, population trends and local infrastructure which influences market appeal and buyer capacity. Annual residential price growth has averaged 7.1% over the past five years.
Source: McGrath Research, Cotality
Price outlook
-9%
Forecast for median prices Sydney
Looking ahead, Sydney residential prices are likely to contract over the coming year. McGrath Research forecast Sydney residential property prices to decrease by 9% at the end of 2026, followed by -3% in 2027. Residential price forecasts consider borrowing capacity, the balance of supply and demand, economic conditions, population trends and local infrastructure which shapes affordability, demand and market direction.
Source: McGrath Research
Sydney, Q2/26
Houses
Apartments
Residential
$1,549,500
$890,500
$1,260,700
Change from a quarter ago
-3.4%
-1.9%
-2.9%
Change from a year ago
3.0%
3.3%
3.1%
Median price
Source: McGrath Research, Cotality
5
Residential rents Update
Vacancy
Spring/26
1.8%
Residential rental vacancy Sydney
The number of residential rental homes in Sydney is currently undersupplied. Sydney rental vacancy was recorded at 1.8% at the end of Q2/26, changing 0 bps in the quarter whilst rising 10 bps over the past year according to REIA. Generally, around 3% vacancy is considered a balanced market between rental supply and demand. Below this equilibrium is considered to be an undersupplied pool of rental homes, which places upward pressure on weekly rents. For the past five years, Sydney residential rental vacancy has averaged 1.9%.
Source: McGrath Research, REIA
Yield
-23 bps
Gross rental yield Sydney
Sydney gross rental yields have trended lower over the past year. Residential yields fell 23 bps in the Q2/26 quarter to be 3.26% across Sydney, whilst 23 bps lower compared to a year ago. A yield pushing beyond 4% is more desirable for investment properties located in capital cities, while below this, tends to show higher property values relative to rental income. Sydney gross rental yields have averaged 3.26% over the past five years.
Source: McGrath Research, Cotality
Sydney, Q2/26
Houses
Apartments
Residential
Gross rental yield
2.59%
4.12%
3.26%
Change from a quarter ago
-9 bps
-41 bps
-23 bps
Change from a year ago
-10 bps
-40 bps
-23 bps Source: McGrath Research, Cotality
6
Residential rents Update
Median weekly rent
Spring/26
$775
Tracking median weekly rents Sydney
Residential rents across Sydney trended above the weekly rate recorded a year ago. Sydney rents rose 1.3% in Q2/26, whilst increasing 6.2% over the past year, to stand at a median $775 per week. Rent changes are driven by rental supply, tenant demand, migration trends, economic conditions and investor activity which together impact the vacancy rate. For the past five years, Sydney rents grew an average 7.4% per annum.
Source: McGrath Research, Cotality
Rental outlook
+5%
Forecast for median rents Sydney
The Sydney residential market is continuing to experience upward pressure on weekly rents. McGrath Research forecast Sydney rents to rise 5% at the end of 2026, with a further 6% rise likely in 2027. The rental forecast takes into consideration new and existing supply levels, population changes, economic conditions and upgraded local infrastructure which can influence future tenant demand, vacancy rates and rental growth.
Source: McGrath Research
Sydney, Q2/26
Houses
Apartments
Residential
Median weekly rent
$800
$740
$775
Change from a quarter ago
0.6%
2.1%
1.3%
Change from a year ago
6.7%
5.7%
6.2% Source: McGrath Research, Cotality
7
Definitions
New apartments New apartments are defined as being within a 3+ storey building and with 6+ apartments as defined by McGrath Research. Sydney Sydney refers to the Greater Capital City Statistical Area or ‘Greater Sydney’ as defined by the Australian Bureau of Statistics. Inner suburbs The inner suburbs are considered to be within the 0-10km ring from the Sydney CBD as defined by McGrath Research. Middle suburbs The middle suburbs are considered to be within the 10-25km ring from the Sydney CBD as defined by McGrath Research. Outer suburbs The outer suburbs are considered to be outside the 25km ring from the Sydney CBD as defined by McGrath Research.
Guiding you home
Michelle Ciesielski National Head of Research, McGrath Research www.mcgrath.com.au/research
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