New Year's Eve, Sydney
If you want an Australian New Years experience that is different from anything you've done before, I would highly recommend The Peats Ridge Festival. It has the most amazing atmosphere and was so packed with live music, dancing, beautiful art and drumming workshops I barely had enough time to fit it all in. There were art displays in the trees and suspended above you, and people seemed to start performing everywhere. I loved chilling out in their chai temple which was filled with cushions and an escape from the madness! On New Years Eve, everybody dressed up and put on a mask (which I made myself at a mask making stall) and paraded through the festival dancing and singing and playing drums; it was one of the most surreal things I've ever done. I even got to see Lamb; one of my all time favourite acts. It is only about 1 hour north of Sydney, and you can camp next to your car, so you don't have to worry about what to do with your luggage. It really was the highlight of my trip to Australia, and I would really consider including it in your travels if you are on the East Coast for New Years!
Good luck on finding anything reasonable in central Sydney for New Year's. Sydney is one of the most expensive cities in the world at any time especially at this time of the year and the accommodation tends to be booked out if you wait too long. You may be better to try to find accommodation in one of the close inner surrounding suburbs as the public transport, especially the trains will be crowded (as all of Sydney will be anyway) but it only takes a fairly short time to be in the city depending on how far out you are staying. The city will be absolutely jam packed for the unbelievably spectacular fireworks display on the Harbour Bridge and the surrounds. I witnessed this marvelous sight some years ago from the suburb of Balmain which is close to the bridge and from my vantage point on the harbour foreshore I had the whole length of the bridge as a view and when it went up it was truly an amazing sight and experience that I will never forget. I was living at Bondi at the time so did not have to worry about accommodation although you could look to see what is availalble in Balmain as this is a very popular and vibrant suburb with bars and live music and great restaurants. Balmain is very close to the city but will be nowhere near as crowded as I found out, cheers,
Celebrating new year in Australia is very different from my hometown.
In Australia everyone celebrates new year on the streets........or botanical Gardens. Compared to my country almost everyone celebrates inside.
It was a great experience to celebrate new year in botanical gardens in sydney with thousands of people on the streets!