Now that the 2025 federal election is behind us, the property conversation has shifted to interest rates. Economists are forecasting that the cash rate could fall to 3% or lower by early 2026—news that’s expected to stimulate movement across much of the market.
But when it comes to luxury apartments in Sydney’s Eastern Suburbs—particularly in suburbs like Bellevue Hill, Rose Bay, Edgecliff, and Double Bay—the picture isn’t quite so simple.
As someone who’s worked in real estate for 35 years, I can confidently say that this is one of the most mixed and layered market conditions I’ve ever seen. It’s no longer about simply selling first and then buying—it’s about executing two interdependent transactions simultaneously, each with its own constraints.
This market is driven by a delicate buyer chain—downsizers, upsizers, and the shifting value equation between houses and apartments. And right now, that chain is under strain.
Demand Is Real—But It’s Not Endless
In hotspots like Bellevue Hill and Rose Bay, there appears to be strong demand for luxury apartments under $7 million—especially those close to shops and lifestyle hubs. But when you dig deeper, the reality becomes clearer: demand is conditional, and the buyer pool is finite.
I recently analysed 12 months of sales data across suburbs where downsizers typically originate—Bellevue Hill, Dover Heights, Rose Bay, and Vaucluse.
Here’s what I found:
Most likely to buy in Bellevue Hill & Rose Bay:
12 homes sold between $7 million and $8 million
28 homes sold between $8 million and $10 million
36 homes sold between $10 million and $15 million
Most likely to buy in Edgecliff & Double Bay:
That’s just 113 homes sold over $7 million—your potential downsizer base. But not all of these sellers are transitioning into apartments. Many are staying in their homes, some are moving out of Sydney, and others are opting for retirement-style living.
Here’s the Kicker: The Trade-Off Doesn’t Make Sense
Through dozens of conversations with would-be downsizers, one common issue stands out: the trade simply doesn’t add up.
A newly built 160 sqm three-bedroom apartment in Bellevue Hill or Rose Bay can cost $7 million or more—often the same or more than the current value of their freestanding home.
“Why would I give up a home with land for a smaller space and strata fees, only to spend the same—or more?”
It’s a fair question. And it’s why many downsizers are hesitating—especially when the move involves giving up a family home and lifestyle.
Even for those ready to act, another hurdle arises: they can’t buy until they sell—and that means someone needs to purchase their home first.
The Upsizer Chain Reaction
Enter the next link in the chain: the upsizer.
Typically a younger family in their 40s or 50s, these buyers are looking to move from a $3–$4 million home in a neighbouring suburb into a $7 million property in Bellevue Hill, Vaucluse, or Dover Heights.
Here’s the financial reality:
If they’re upgrading from a $4 million home to a $7 million home, they need to borrow $3 million.
At today’s average interest rate of 6.5%, that loan comes with repayments of around $19,000 per month—or $230,000 per year.
To qualify, they’d need a combined annual income of $600,000+, plus equity, servicing capacity, and approval.
That’s a big ask—even for double-income professionals.
And remember—they, too, need to sell their home first. And that buyer is often even more affected by lending criteria, affordability limits, and rate sensitivity.
So if one buyer at the base of the chain stalls, the entire transaction pipeline freezes.
This isn’t an overheated market. It’s a jammed chain of buyer decisions.
Let’s Talk Development Reality
On the supply side, developers are still forging ahead with boutique apartment projects. But the economics are getting harder to justify.
Today, developers are paying over $2 million per apartment in land costs alone—before a single dollar is spent on:
Architecture and design
Council and planning approvals
Construction (with rising material costs)
Finance and holding costs
Required development margins
To make the numbers work, projects need to achieve resale prices of $40,000 to $45,000 per square metre.
For a 160 sqm apartment, that translates to at least $7 million.
Add NSW stamp duty—currently $429,000 on a $7 million purchase—and the real entry cost is closer to $7.5 million, before you’ve even unpacked a box.
Today’s Eastern Suburbs market isn’t about “hot” or “cold”—it’s about timing, sequencing, and unlocking movement across a tightly linked chain of buyers.
Whether you’re a downsizer, upsizer, or developer, success now comes down to strategy, not speed.
Final words
If you want real guidance—grounded in experience and tailored to this market—I’m here to help you make your next move with confidence.
