The Illawarra's Christmas day drenching made it the wettest region in the state with rainfall between 50 millimetres and 70 millimetres.
It is the heaviest December rain since at least 1997.
"A low pressure system developed just off the coast of NSW and most of the rainfall across the state occurred over the Illawarra coast," Weatherzone meteorologist Ben Domensino said.
That low pressure system had moved off shore on Thursday morning, taking with it most of the rain, which should ease through the day.
Christmas Day revellers who had hoped to spend a sunny day on Sydney's beaches had their plans thwarted once again this year, with the heaviest rain in more than a month drenching the city on Wednesday.
The city's cool and wet Christmas Day was almost a carbon copy of last year's weather on December 25.
On both days, the temperature hit a maximum of just 21 degrees, which was four degrees colder than the average long-term December maximum, making it the first time the city has experienced back-to-back Christmases that cold since records began more than 150 years ago.
Weatherzone meteorologist Ben Domensino said the rainfall amounts were also remarkably similar between the two years.
On Wednesday, the city received 20.8 millimetres of rain, compared to 21.6 millimetres on Christmas Day 2012.
"It's very similar to Christmas last year, with the same maximum temperature and within a millimetre of the same rainfall amount, which is a bit strange," Mr Domensino said.
Thursday is forecast to reach a maximum of 26 degrees in the city, with winds increasing up to 40km/h in the morning before easing for the start of the Sydney to Hobart yacht race at 1pm.
"By the time the race starts we're looking at south-easterly winds reaching about 20-30km/h," Mr Domensino said.
"The strongest winds will have occurred before the start of the race, although the boats will be heading out of the heads into a south-easterly wind, but it will be easing into the afternoon as that low moves further offshore."
The skies above the MCG were looking a little cloudy for the start of the Boxing Day Test on Thursday morning, and Mr Domensino said there was a chance of showers in the afternoon.
"There is also an outside chance of thunderstorms as well, mainly in the early afternoon as well, but they probably won't cause lengthy breaks in play," he said.
A top of 29 degrees is forecast in Melbourne on Thursday.
Sydney is forecast to be partly cloudy throughout the weekend and into next week.
The city is expected to reach a top of 29 degrees on New Year's Eve, and 27 degrees for the first day of 2014.
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