The winner of Sydney Film Festival's $60,000 Sydney Film Prize, announced on Sunday night at the festival's closing ceremony, is The Heiresses, the first narrative feature by Paraguayan filmmaker Marcelo Martinessi.

Set in Asuncion, capital of Paraguay, Martinessi's subtle drama of class, confinement and female awakening follows downwardly-mobile aristocrat Chela (Ana Brun, who won Best Actress at the Berlin Film Festival in February) as she adjusts to a new, more impoverished reality after her life partner Chiquita (Margarita Irun) is imprisoned for fraud.

Ana Brun, who plays Chela, had never acted in a film before The Heiresses. ( Supplied: Palace Films Australia )

After falling into work almost by accident, as de-facto chauffeur for her wealthy elderly neighbours, Chela meets Angy: a younger (ostensibly heterosexual) woman who awakens her desire.

The Heiresses previously won the Berlinale Silver Bear Alfred Bauer Prize for opening new perspectives.

Scroll to end for full list of Sydney Film Festival prize winners.

Martinessi has said The Heiresses was influenced by the women in his family, the female-centric films of Rainer Werner Fassbinder, and the work of Paraguayan writer Gabriel Casaccia. ( Supplied: Sydney Film Festival/Rocket K Photography )

Official Competition SFF 2018 BlacKkKlansman (USA)

Dir Spike Lee

BlacKkKlansman (USA) Dir Spike Lee Jirga (AUS)

Dir Benjamin Gilmour

Jirga (AUS) Dir Benjamin Gilmour Leave No Trace (USA)

Dir Debra Granik

Leave No Trace (USA) Dir Debra Granik The Miseducation of Cameron Post (USA)

Dir Desiree Akhavan

The Miseducation of Cameron Post (USA) Dir Desiree Akhavan Aga (BGR/GER/FRA)

Dir Milko Lazarov

Aga (BGR/GER/FRA) Dir Milko Lazarov Daughter of Mine (ITA)

Dir Laura Bispuri

Daughter of Mine (ITA) Dir Laura Bispuri Transit (GER)

Dir Christian Petzold

Transit (GER) Dir Christian Petzold Wajib (PALESTINE)

Dir Annemarie Jacir

Wajib (PALESTINE) Dir Annemarie Jacir The Seen and Unseen (IDN)

Dir Kamila Andini

The Seen and Unseen (IDN) Dir Kamila Andini The Heiresses (PRY)

Dir Marcelo Martinessi

The Heiresses (PRY) Dir Marcelo Martinessi One Day (HUN)

Dir Zsofia Szilagyi

One Day (HUN) Dir Zsofia Szilagyi Matangi / Maya / M.I.A (GBR)

Dir Stephen Loveridge

In press notes for the film, Martinessi, who has made several documentary features and narrative shorts, says:

"I grew up in a world shaped by women: mother, sisters, grandmothers, aunts, ladies in the neighbourhood. I wanted my first feature to get into that female universe."

This year's Sydney Film Prize was awarded by a five-person jury chaired by Australian artist and filmmaker Lynette Wallworth, and featuring fellow Aussie, actor Ewen Leslie (The Daughter, Official Competition SFF 2016), Filipino producer and writer Bianca Balbuena, South African film composer and songwriter Chris Letcher, and Tokyo Film Festival program director Yoshi Yatabe.

The Prize is awarded each year to the most "audacious, cutting-edge and courageous" film in Sydney Film Festival's official competition.

Jury president Lynette Wallworth described The Heiresses as "provocative, layered and surprising", and said that Martinessi's film "carried us with restraint and confidence into a world still shielded by entitlement even as its structures crumble.

"It revealed a delicately unfolding courage to release what we cling to, even when it is all we know, and let change come — within ourselves and within this collective frame that we build, that is society."

The Heiresses will receive a general cinema release through Palace Films Australia.

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Previous Sydney Film Prize winners: 2017: On Body and Soul

2017: On Body and Soul 2016: Aquarius

2016: Aquarius 2015: Arabian Nights

2015: Arabian Nights 2014: Two Days, One Night

2014: Two Days, One Night 2013: Only God Forgives

2013: Only God Forgives 2012: Alps

2012: Alps 2011: A Separation

2011: A Separation 2010: Heartbeats

2010: Heartbeats 2009: Bronson

2009: Bronson 2008: Hunger

This year's Official Competition was the first to achieve gender parity among directors, in a year in which the world's premiere film festival, Cannes, was criticised for its lack of equal representation.

The 12-strong line-up covered several hot-button topics and themes, including environmental degradation (Milko Lazarov's Inuit drama Ága), race relations in America (Spike Lee's BlacKkKlansman), the war in Afghanistan (Benjamin Gilmour's Jirga), the welfare of army veterans (Debra Granik's Leave No Trace), and immigration (Christian Petzold's Transit, and Stephen Loveridge's documentary Matangi/Maya/M.I.A).

Spike Lee's BlackKlansman won the Grand Prix at this year's Cannes Film Festival, awarded by a jury led by Cate Blanchett. ( Supplied: Universal Pictures )

Female-centric stories were also a strong theme, with the majority of the 12 films in competition focusing on female protagonists — including the Hungarian drama One Day, by first-time feature director Zsofia Szilagyi, in which a wife and mother's ability to successfully navigate the banal breadth of the day after she discovers her husband's affair is rendered almost heroic.

Speaking on behalf of the Jury, Wallworth said: "we were broken and mended by these films. We soared with their majesty, we were moved by their intimacies, and we were changed by what they provoked in us: the possibility of redemption, of relationship, and of loss that cannot be recovered."

Full list of winners

The Sydney Film Prize: $60,000 cash prize

Winner: The Heiresses (Las herederas — original title)

The Sydney-UNESCO City of Film Award: $10,000 cash prize

Winner: Warwick Thornton (Sweet Country)

Documentary Australia Foundation Award for Australian Documentary: $10,000 cash prize

Winner: Ghosthunter (Dir Ben Lawrence)

Dendy Awards for Australian Short Films — Dendy Live Action Short Award: $7,000 cash prize

Winner: Second Best (Dir Alyssa McClelland)

Dendy Awards for Australian Short Films — Rouben Mamoulian Award for Best Director: $7,000 cash prize

Winner: Nursery Rhymes (Dir Tom Noakes)

Dendy Awards for Australian Short Films — Yoram Gross Animation Award: $5,000 cash prize

Winner: Lost and Found (Dir Andrew Goldsmith and Bradley Slabe)

Dendy Awards for Australian Short Films — Event Cinemas Australian Short Screenplay Award: $5,000 cash prize

Winner: Undiscovered Country (Wr/Dir Tyson Mowarin)