Investors return to Sydney market as rates peak and yields strengthen: HTW report

Sydney’s residential market is showing signs of renewed investor activity as interest rates stabilise and rental yields remain firm, according to Herron Todd White’s Month in Review – March 2025.

The report found low vacancy rates and consistent rental demand had drawn investors back into the market, particularly in the city’s inner suburbs and areas offering dual occupancy opportunities.

“In New South Wales, investor loans represented 44 per cent of all lending in late 2024 — the highest level since 2016 — as affordability challenges pushed first home buyers to the sidelines,” Herron Todd White stated.

In Potts Point, a one-bedroom unit at 28/67-69 Macleay Street sold for $600,000 in February, with a weekly rental return of $600 to $650 equating to a gross yield of 5.6 per cent.

Dual occupancies in the eastern suburbs also continued to attract attention, with a Randwick property at 3-3A Dick Street achieving just under $5.5 million and delivering up to $4,250 a week in rent — a gross yield of four per cent, according to the report.

In Western Sydney, investor demand remained strong for house and granny flat combinations. A property in Blacktown sold for $1.21 million with weekly rent of $955 and a 4.1 per cent gross yield.

Affordable units in outer suburbs are also drawing interest from first-time investors. A two-bedroom apartment in Penrith at 4/15-17 Thurston Street fetched $435,000, offering a projected 5.02 per cent gross yield.

Herron Todd White noted that Sydney’s market overall was “at the start of decline” in the property cycle, though buyer confidence was beginning to lift on the expectation of rate cuts later in the year.