Sydney’s property market above $ 1million: what the last six weeks tell us about the next six weeks to Christmas and beyond

The last six weeks

Residential property:

These were some comments from the handful of higher end eastern suburbs, lower north shore and inner west residential selling agents whose newsletters, unlike the thousands of others we receive, tell it like it is: 

• “Sales volumes have lifted but remain behind buyer activity, suggesting many are still waiting for confirmation that stability has returned” 

• “Let’s start with Marrickville and that super impressive figure over 90% [auction clearance rate]. It shows how hot this suburb is right now. It doesn’t help with such low stock levels comparative to last year when a whopping 37 properties went under the hammer in October 2024 compared to only 24 last month. Dulwich Hill had a slight lull after a sustained period of extremely high clearance rates. Around two out of three properties sold either prior or on the day which is still a respectable outcome with supply also below average. Hurlstone Park only had four auctions with a success rate of 50%” … 

• “Throughout October, while many considered the broader market to be softening and somewhat more challenging, the Parkside and Beachside [eastern] suburbs continued to deliver a number of strong results. Conditions have, however, become more selective, with well-positioned and correctly priced properties achieving standout outcomes while others have experienced slower engagement” 

• “It’s counterintuitive as a sales person to highlight market weakness as it feels perilously close to biting the hand that feeds you…but… in uncertain times the value of realism is rising…Even terminology like ‘soft’ and ‘patchy’ are euphemistic for the hard truth, prices [in Mosman and surrounds] have flattened and in some categories they have fallen by 5-10%. There are now numerous examples of properties that have sold in the past few years that have re-sold at or less than their last price. My observation of 2025 is that if you remove the outliers and ignore the frothy misleading press and overly ‘optimistic’ agents it’s been a bumpy year for property.”  

 Adding to a few unicorn seekers who have approached us recently, those comments align with this SMH piece on 14 October 2025: 

“About seven in 10 homes for sale by auction found buyers in September, but experts warn the upbeat figures are masking underlying caution… Auctioneer Clarence White…said most homes were selling and Sydney’s clearance rate of 71.2 per cent looked “not bad on paper” but did not tell the whole story. “I think there is still a lingering price caution with buyers and buyers are still approaching auctions with a tentative approach, wanting to bid in small increments … sometimes showing reluctance to bid” 

as well as:  

“[the] ANZ-Roy Morgan Consumer Confidence dropped 1.3pts to 84.5 and is now 2pts lower than a year ago, October 28 – November 3, 2024 (86.5), and 2.1pts below the 2025 weekly average of 86.6.” 

Commercial, industrial and alternative property:

The 30 October 2025 Urban Developer’s Commercial Real Estate Summit attended by our Principal painted a similar picture with presenter Ben Martin-Henry saying: 

“When we start to see big deals, there’s a bit more confidence in the market. People are willing to write much larger cheques. So that’s what’s really driving the market.  

But the fact that smaller deals aren’t driving the market is a little bit of a concern for me … the big end of town is spending, but the smaller end of town is still struggling to raise capital, still struggling to get debt financing. Gearing ratios have plateaued, aided by interest rate cuts and valuations bouncing off the bottom, but the pace at which ratios will decline is yet to be decided.” 

His slide proved those comments: 

In addition to the RHS of the next slide showing a 12 month softening in Sydney office, retail and industrial property it also exposed the reliance of the senior housing care sector on government funding. So too for child care centres with brownfield rather than greenfield sites being favoured by big players like Charter Hall (see also the quote from Evan Lucas below). 

• What buoyed the animal spirits of Sydney property buyers above $1 million: 

Trump 

Headlines about the Palestinian cease fire/hostages release followed by the delayed Trump/Albanese bromance centring around the so-called rare earths and AUKUS ‘deals’ and suggesting Australia was the only nation currently to escape Trump’s dark global shadow. 

Interest rates 

The expectation of further interest rate drops adding to the trend of three drops this year and boosted by the 16 October ABS report that the jobless rate had jumped to a four-year high of 4.5 per cent causing news.com.au to trumpet “Surprise unemployment rate jump brings November rate cut into play” (hardly ‘surprising’ given earlier reports of the same from Roy Morgan and other independent researchers). 

NSW planning control changes 

Over that six week period we fielded multiple inquiries from established and aspirant developers wanting to exploit actual and proposed expansive NSW planning controls for everything from manor houses to dual occupancies and medium rise unit developments. 

Private credit 

As ASIC reported this month (the ASIC Report): 

“Australia has experienced rapid expansion in its private credit market over the past 18 months. The market is estimated at $200 billion in assets under management (AUM) and continues to grow, driven by factors such as the …moderation in bank lending to higher-risk real estate ventures”… 

Superannuation tinkering 

Captured by the AFR on 25 October 2025 (emphasis ours): 

“…Labor’s latest intervention has “shattered confidence” in the retirement savings system like never before, says Richard Holden, an economics professor at the University of NSW. 

Although the “worst” element of the proposal – the taxing of unrealised gains – was canned, Holden believes a line has been crossed, the consequences of which will involve people putting their money elsewhere. 

“The whole super industry, including the industry funds, have been damaged by this because it says the fundamental rules of the retirement savings game are totally up for grabs,” Holden says.” 

• What dampened the animal spirits of Sydney property buyers above $1 million:

Ironically, this list includes influences which also buoyed those spirits.  

Trump 

Many buyers didn’t believe Australia would escape Trump’s dark global shadow. 

 Interest rates 

The property price stimulus created by three interest rate drops halted on 29 October 2025 with the ABS report that over the twelve months to the September 2025 quarter the CPI rose to 3.2%.  

Of the reams since written, this piece on 6 November 2025 by Evan Lucas in Alan Kohler’s Intelligent Investor best captured the mood for us (emphasis again ours): 

“[T]he RBA basically [put] a pin in interest rate cuts in the foreseeable future… 

That is what the RBA told us this week in its statement on monetary policy and its outlook for inflation…what the RBA is saying is that with the structural roll off of the energy rebates from either State or Federal Governments, we’re now playing catchup and the price increases they’ve been depressing artificially is now here and we are going to have to wear it… 

[W]e now have an RBA…telling us, well actually, because of all this, inflation is going to rise to 3.7 per cent by June next year. It was at 2.1 per cent off the back of all of those subsidies, all of those depressive marks that the Government has made. That means that trimmed mean, core inflation is going to pop up to 3.2. There is no way any central bank around the world can start talking about further cuts when inflation is increasing outside of its target and is well and truly doing the wrong thing for its mandate. 

There are some that are forecasting 2026 could see rate hikes, that’s possible, the market doesn’t see it that way. The market has an 80 per cent chance that we will see a solitary rate cut by mid-2027 and are we about to go through an incredibly protracted period of rates not doing anything? Are we about to go back to 2016-17 and then 2018-19, where the RBA did nothing for months and months on end? That, I think, is probably the real prospect here, is that they will continue to just hold to wait to see what the data says…What does it mean for consumption and what does it mean for the overall prosperity of this country. We’re going to go backwards and again, knowing governments and how governments work, they’re going to intervene. Without public expenditure the last two-and-a-half years, not only would we have had a per capita recession like we had midway through last year for seven consecutive quarters, we’re going to have it at the top end as well. Population can’t keep mitigating the fact that at the moment, things are okay, but without public expenditure and without consumption, we’re in real trouble.” 

NSW planning control changes 

In the last six weeks, the NSW Minns Labor government’s efforts to meet its National Housing Accord housing supply targets were hammered on several fronts causing much market uncertainty. 

Two such policies are collective strata sales best illustrated by those in Potts Point and Elizabeth Bay (CSS) and mega lot amalgamations to make way for more density under the State Government’s Low and Mid-Rise Housing (LMR) and Transport Oriented Development (TOD) reforms. 

CSS 

It was a different world when the legislation was changed 10 years ago to allow 75% rather than 100% to decide whether to sell an entire strata building to a developer. Although met with skepticism at the time, making it easier to replace buildings at the end of their lives seemed sensible. 

However, policies like this, whose implementation relies on the private sector, gather dust unless they can be financed and are profitable for developers. 

Two things happened in the meantime which rendered that legislation a law of unintended consequences: the massive post Covid spike in constructions costs and the National Housing Accord. 

Because of the former, strata conversion has proven feasible for developers only on well located sites, preferably with iconic views on which smaller units occupied by lower income tenants and owners give way to a few large, luxury units targeted at rightsizing baby boomers at eye watering prices ranging from circa $60-80,000/m2. 

And the latter has led to a direct conflict between the CSS legislation and the NSW Sydney Local Environmental Pan 2012 (Amendment No 109) formally endorsing on 30 May 2025 the City of Sydney’s “no net loss of apartments” (dwelling retention) prohibiting more than a 15% net loss of dwellings in new residential buildings. 

Conflicting policies are bad policies per se and send a confusing message to property buyers and sellers. 

Instead of acknowledging the conflict and replacing the CSS legislation, the State Government side stepped with a regime giving developers greater height limits in return for increasing the number of affordable units in each development for a period of 15 years.  

That initiative just added fuel to a fire as The Chimes development in Potts Point is proving with neighbours up in arms about affordable housing loss (one in particular – see below), the increased height limit, others wondering what happens to those affordable units after 15 years and reports of affordable units elsewhere in Sydney being  leased at high rents and other such tenants being prohibited from using gym and swimming pool facilities. 

While we are aware of developers circling two prominent buildings in Potts Point and another in Woollahra, each with spectacular views, we have also been told last week by a senior planner acting for developers of all sizes that many such projects have been shelved. That intelligence gels with anecdotal evidence that’s come our way of some baby boomers realising they do not need such large units and which might explain why, for example, three of the nine 300-400m2 single floor units in Elizabeth Bay’s “Billyard” remain unsold after about three years project marketing.

The other and sometimes overlooked aspect of CSS is that while some developers will pay up to three times over market value for a unit, much of that windfall for investor vendors goes in capital gains tax with that investor’s bounty being further eroded by stamp duty and the high price of a replacement property. 

LMR and TOD  

The Urban Developer dealt succinctly with LMR on 14 October 2025: 

“It was designed to break NSW’s housing gridlock but, several months in, the rollout of.. LMR is exposing how deep the cracks run… [with] councils, planners, residents and developers clash[ing] over how the rules should be interpreted…[A report by Astrolabe Group] names Hills, Lane Cove and Woollahra among those refusing to allow subdivision of duplex sites… 

Premier Chris Minns, speaking in August, named Mosman, North Sydney and Hunters Hill as “the three most intransigent and difficult councils”. 

“We have the legislative power to override their decisions—and we are doing it,” he says. “The Housing Delivery Authority was deliberately established to knock over a decision of a local council.” 

Nothing like a Premier declaring war on local councils to buoy market confidence!  

The SMH followed suit regarding TOD on 23 October 2025: 

“A government drive to fast-track 185,000 homes across NSW over the next 15 years is off to a mixed start, as one part of Sydney is flooded with proposals for multistorey housing blocks while others have yet to record a single planning application… Eighteen months after the NSW government’s Transport Oriented Development (TOD) planning reforms came into force, Department of Planning figures have revealed 5062 dwellings are proposed across the development precincts and the vast majority are earmarked for the tree-lined streets of Sydney’s north shore… 

The uptake by developers has been widely varied, as four transport-oriented development precincts in the Ku-ring-gai local government area – Gordon, Killara, Lindfield and Roseville – account for 93 per cent of the 5062 proposed dwellings across TOD areas in NSW. 

This is led by Lindfield where developers are proposing to build 2426 multistorey dwellings… 

Other suburbs in TOD zones have received a handful of planning applications, including Banksia, Croydon and Dulwich Hill, which each recorded fewer than 10 new dwellings proposed… 

Several councils in Sydney have developed their own housing policies which would replace the TOD controls with greater housing targets, including Inner West Council, which has proposed 31,000 new homes across the local government area. 

Ku-ring-gai Council has also developed an alternative policy to intensify density along the Pacific Highway [with which alternative policy we have recently been involved]. The Department of Planning has recommended endorsing the council’s strategy by [30] November [2025]”… 

The overlooked and potentially self defeating aspect of mega lots is that their appeal to sellers is the premium achieved compared to selling their lots individually. That premium however is a function of scarcity: the more mega lots under TOD, LMR and Accelerated LMR the less the premium, the less incentive to sell.  

Private credit 

As the ASIC report also said: 

“From October 2024 to August 2025, ASIC conducted a surveillance reviewing 28 private credit funds [and] there are some areas where improvement is needed – and in some cases, materially so.” 

The collapsed hotel empire of Jon Agdemis which was largely funded by private credit and resulted in his bankruptcy on 3 October 2025 backdated to 18 November 2024 was a spectacular example of this in the last six weeks. It is said to be the largest bankruptcy since Alan Bond’s in 1992. 

The Agdemis bankruptcy echoes the British experience with The Telegraph UK reporting on 14 October 2025 that its private credit market  …”is lightly regulated. The size of the exposure is often unknown. And many of the loans are of remarkably low quality. 

It remains to be seen whether we are in the middle of an epic financial bubble or not. We will only know for sure once we have the benefit of hindsight. 

And yet, one point is becoming increasingly clear: if we are, it is not a soaring gold price or the crazy valuations of anything connected to artificial intelligence that will bring it crashing down to Earth. It is the murky world of shadow banking – and the signs of stress are already becoming alarmingly obvious to anyone who cares to look.” 

• What are some of the changes and buying opportunities that might lie ahead after Christmas? 

 Planning controls 

More State Government reforms are almost certain which may be reined in by the courts following litigation commenced by a private citizen in Mosman.

And in the past 6 weeks, a new player entered the affordable housing fray…“PJK.” 

As reported in The Guardian on 23 October 2025 and elsewhere, one of The Chimes neighbours is former PM Paul Keating who, in that last six weeks, came out of hibernation on this issue to swing against the loss of affordable housing under CSS.  

This bear has a long history of influencing the course of urban planning over the years doing so at Circular Quay, Finger Wharf, Paul Keating Park at Bankstown and Barangaroo. 

Although having left office in 1996, his continuing influence shouldn’t be underestimated especially being of the same political stripe as those now running the show in Macquarie Street; just up from Macquarie Street East Precinct which he and Lucy Turnbull were retained in 2018 to review. 

Caps on interest only lending  

In addition to quelling a spike in lending to investors, this might also stop the competition between those investors and first home buyers availing themselves of the Federal Government’s 5% Deposit Scheme. This latest and well intentioned scheme is as flawed as its predecessors: all such schemes always see investors jump in first and bid up prices beyond the reach of those first home buyers. Hence the almost exponential difference between loan approvals to investors compared to owner occupiers.

Private credit regulation 

To quote ASIC Chairman Joe Longo as reported in the AFR on 5 November 2025:  

“We still think there’s room for better practices to develop, and unless we see that happening in a consistent way coming out of the sector, then we will be calling for additional regulation”… 

Anti Money Laundering Legislation 

AUSTRAC’s “Overview of Initial Customer Due Diligence (Reform)” applying to real estate agents which starts to apply as soon as March 2026 is both penetrating and formidable. Long overdue and once fully implemented from 1 July 2026, it may exert downward pressure on property prices depending on the volume of laundered money circulating in the Sydney property market. 

And being the first time a Commonwealth agency will regulate directly an aspect of real estate businesses, this legislation should complement the promise of NSW Fair Trading  to lift standards for buyers’ agents. 

Final word 

Lots for Sydney property buyers to consider and some changes on the horizon which, as we suggest, may exert downward pressure on property prices leading to buying opportunities. 

It remains a fabulous asset class you can touch and feel, is more stable than Bitcoin and unlike bullion, can earn you income! 

For help navigating this market, please get in touch.