After 35 years in Sydney real estate, I’ve seen it all—booms, busts, policy swings, and shifting buyer trends. But what’s unfolding now in Sydney’s Eastern Suburbs may reshape the market more dramatically than anything we’ve seen in decades.
The NSW Government’s new Low and Mid-Rise Housing Policy is the boldest planning reform in recent memory. Its goal: deliver 112,000 new homes over five years by encouraging duplexes, terraces, and boutique apartment blocks within 800 metres of transport hubs and town centres.
On paper, it’s a logical solution: increase supply, reduce price pressure, and improve access to housing.
But the reality on the ground—particularly in blue-chip suburbs like Rose Bay, Dover Heights, Bellevue Hill, and Vaucluse—suggests we’re heading into a highly complex and uncertain period. The assumptions behind this policy don’t always line up with what’s actually happening in the market.
When Policy Meets Ground-Level Economics
Previous reforms—like the 2018 Low Rise Housing Diversity Code—struggled under local council pushback. This time, those roadblocks are gone, with blanket rezoning enforced at a state level.
Still, just because zoning has changed doesn’t mean economic viability has.
Right now, we’re seeing aggressive land acquisition in places like Dover Road, Newcastle Street, and Spencer Street, where developers are paying $10,000 to $15,000 per square metre for raw land. Once you factor in construction, financing, compliance, marketing, and developer margin, finished apartments are being modelled at $45,000 to $55,000 per square metre.
A 150m² apartment? That’s $6.75 to $8.25 million.
These projects are clearly targeting the downsizer market—longtime homeowners expected to sell up and transition into luxury, low-maintenance living.
But here’s where I believe the numbers begin to unravel. Let’s explore a few likely scenarios based on what I’m seeing develop.
What 2027 Could Look Like: Four Scenarios to Watch
1. Oversupply of High-End Apartments
By 2027, we’re likely to see hundreds of new luxury apartments released across Rose Bay, Bellevue Hill, Bondi Junction, and Edgecliff. All targeting the same buyer group: affluent downsizers.
But when you flood a niche market with too much similar stock, buyers gain the upper hand. Developers lose urgency. Pre-sales stall. Finance delays follow. Projects are paused or discounted.
Downsizers aren’t impulse buyers—they’re cautious, financially astute, and willing to wait. When the market tips toward oversupply, pricing adjusts accordingly.
2. The Downsizer Dilemma: Sell or Stay?
Many downsizers enter display suites enthusiastic—until the numbers don’t stack up.
They realise their family home might fetch less than the cost of a new 3-bedroom apartment in the same suburb. Some opt out. Others renovate instead—perhaps to house adult children or generate passive income. Either way, fewer homes hit the market, and the pipeline developers rely on starts to dry up.
Stamp duty, uncertainty, and a desire for control often keep people where they are.
3. The Upsizer Gap: Who’s Buying the Family Home?
For downsizers to move, someone needs to buy their home. In places like Dover Heights, that means finding buyers for properties priced between $6–$9 million.
In the past 12 months:
Only 26 houses sold in Dover Heights.
15 of those sales were under $7 million.
Just 7 sold for over $8 million.
Now imagine 10 or more downsizers trying to exit at once to settle off-the-plan purchases. That’s a full year’s worth of supply in a single quarter. Prices would be under pressure.
Who’s buying these homes? Likely upsizers—families moving from semis in Bondi or Queens Park, where prices sit between $3–$3.5 million.
Let’s run the numbers:
Stamp duty on a $7 million home = approx. $413,000
Loan (assuming $3.5M) = monthly repayments around $20,980 at 6% interest
Required household income = approx. $839,000/year
How many buyers in Australia meet that threshold? [According to ATO and ABS data, less than 1% of households earn that level of income.] The buyer pool is narrow—and tightening as rates and cost-of-living rise.
4. Developer Risk: The Math is Getting Tighter
From a developer’s perspective, the landscape has shifted:
Land and build costs remain elevated
Holding costs are rising due to slower sales
Sensitivity to price is increasing—particularly where oversupply looms
We’re already seeing signs: completed projects taking months to move, discounts creeping in, and fewer buyers willing to commit off the plan.
This isn’t about poor design or bad locations. It’s a simple misalignment of timing, price point, and liquidity.
Conclusion: This Market Demands Strategy, Not Speculation
The Eastern Suburbs market isn’t crashing. But it is changing—and fast.
Developers, downsizers, and upsizers are now operating in a more complex and fragile system. The assumptions that worked in the past—“this will sell itself,” “there’s always demand,” “just list it”—no longer hold true.
If you’re a downsizer eyeing an off-the-plan opportunity, don’t assume your home will sell fast or easily.
If you’re a developer banking on rapid pre-sales, take a hard look at your buyer pipeline and pricing assumptions.
And if you’re an upsizer, understand the full financial commitment—because affordability at this level is razor-thin.
Speak to your agent, broker, accountant, and financial planner. This is not a time to operate in a silo.
Because when sentiment, interest rates, and policy collide, it’s not always the loudest headlines that shape the future—but the quiet shifts beneath the surface.
And 2027? It may be the year those shifts come to light.
