antelope Archives | Daphne Sauvage

Since the COVID pandemic first struck in early 2020, the gap between Australia’s apartment and house prices has been growing.

CoreLogic data shows that, by January 2024, the median house value commanded a 30.4% premium compared with the median apartment value.

In Sydney, the gap between house prices and apartment prices has become much much higher still – reaching an incredible 68.4%. To put this in perspective, in March 2020, Sydney house apartment values commanded only 32.8% over apartments, meaning the gap between the two has more than doubled.

But why is this happening? And is the same phenomenon taking place here in Darling Point, or are we resisting this national trend? We explore.

How the pandemic changed our property priorities

One of the key reasons for house prices outpacing apartment prices over the past four years has been a change in some of the factors driving our property market.

During the pandemic, we saw many more people begin to work from home, which meant buyers often looked for properties with a home office, or at least space in which to work. Spending more time from home, also meant a lot of people wanted more space: not just for a home office but also for lifestyle reasons.

This encouraged some to move further from the city centre, and regional, lifestyle-focused areas such as Noosa, Byron and the Southern Highlands became Australia’s top performing property markets. Meanwhile, many inner city suburbs – especially the Sydney and Melbourne CBDs – were among the worst performing.

Interestingly, throughout this, Darling Point remained a strong property market with healthy growth in apartment prices from 2020 to 2022.

The growing importance of scarcity value

In the past 18 months or so, however, we’ve seen a lot of people moving closer to the city centre. This includes many who moved away from it during the pandemic, returning “home”. In theory, that should generally encourage apartment prices to grow more rapidly.

But now, I think, we’re seeing different factors at play.

The reality is that Sydney is increasingly becoming a city of apartments. Almost twice as many people here live in apartments compared to Melbourne (30.7% vs 15.5%, according to the 2021 census). In some suburbs, including ours, the ratio of apartments to houses is far higher still.

In fact, Darling Point is one of Australia’s highest-density suburbs, with 87.1% of residents living in apartments, compared with 5.9% in townhouses and terraces and 6.5% in freestanding houses.

A ratio like this often tends to make houses more valuable due to scarcity value, i.e. there are relatively far fewer of them than there are apartments.

Darling Point’s dynamics different from most of Australia’s

In Darling Point, the median apartment value has lifted 52.8% since March 2020 (the start of the pandemic), according to realestate.com.au.

That’s almost 50% higher than the citywide rise in the median house price (39.2%), almost exactly double the rise in Sydney’s citywide median dwelling value (26.14%), and almost six times the rise in Sydney’s median apartment value over the same period (9.6%).

We believe there are three key reasons for this.

First, downsizers are overrepresented among apartment buyers in our local market. Many have recently sold the family home for much more than they would have received pre-pandemic, giving them more to spend on their move. They also often tend to pay cash, which means they are relatively immune from the interest rate rises and cost of living pressures affecting other market segments.

Second, we are also lucky to have a disproportionate number of prestige properties in our area, and the prestige market has been performing exceptionally well over the past few years. Again, this sector has different drivers from the general property market. Here, it’s the health of the economy, exchange rates and even the amount of M&A activity that tend to have more of a bearing on prices than factors such as interest rates.

Finally, there is a shortage of quality listings available for both downsizers and prestige buyers. That means, when something does come to market, it can be the subject of intense competition. This has the effect of driving prices higher too.

What about house prices?

Unfortunately, given that there are so few houses in Darling Point (there are just 119 freestanding homes in the entire suburb), we don’t have specific data on house prices.

However, this scarcity value, is driving intense competition for houses that do come to market. Over the past year we’ve seen numerous sales over $7 million, including several over $15 million, and even a suburb record of more than $60 million.

Exactly how much a house is worth in our area often depends on land size, the home itself, plus how close it is to the water and the extent to which it captures harbour views.

Looking for a house in Darling Point?

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Want more?

If you’d like to know more about the Darling Point property market or if you need help buying or selling a home in 2024, get in touch.

Colonial Darling Point was a far cry from the hustle and bustle of nearby Sydney town.

But right from the start, the suburb attracted some of the colony’s wealthiest and most influential people.

The early days

Although Europeans had been in Australia since the 1780s, they left Darling Point untouched for some time. The land – traditionally belonging to the Cadigal people – was steep and heavily wooded, and, coupled with its unstable shore, access was difficult. Construction of a new road in 1831 changed that, and the land was reserved for sale via public auction.

Initially named “Mrs Darling’s Point” (after Eliza Darling, wife of the NSW governor Ralph Darling), the area attracted much interest. The first allotments were sold to Elizabeth Pike, a hotel keeper, James Chisholm, a soldier and wine merchant, and businessmen Joseph Wyatt, Thomas Smith, James Holt, Thomas Barker and William MacDonald. The Colonial Astronomer James Dunlop was granted an allotment in 1835 on condition that he build a dwelling valued at £1500 on the land.

The land was a bargain at £10 an acre. The suburb’s appeal was obvious even in those days, with one letter-writer to The Australian calling it “the most beautiful and picturesque place on the margin of Port Jackson” and adding that the price “certainly ought not to have been less than £500 per acre”.

At the time, indigenous people still lived in the area, with a description of a corroboree included in a letter to The Sydney Monitor in 1837. The traditional owners called the area Yaranabe after a local leader.

Darling Point’s early residents

Colonial Darling Point attracted some of Sydney’s wealthiest citizens. The suburb was exclusive from the start, and it was believed that “Darlingpointians” had their own customs and manners. The homes they built were much envied in the colony, and a few still exist today.

Of those who bought the first allotments, Thomas Smith was the only one to build a home at Darling Point. His house, Glenrock, was built in 1836 after he’d already realised the value of Darling Point’s land and sold off some of his original holdings. While Glenrock still stands today as part of Ascham School, it’s a slightly newer version, with the original demolished and rebuilt in the 1870s by its later owner, parliamentarian John Marks.

Meanwhile, merchant and local government councillor Thomas Woolley built his home, Percyville, in 1841. When just three years later, the house was sold to Thomas Sutcliffe Mort, it formed the foundations of the much grander Greenoaks, now known as Bishopscourt, after being bought by the Anglican Church in 1910.

But the earliest Darling Point home you can still see – and visit – is Lindesay. This elegant Georgian home was built in 1834 by Colonial Treasurer Campbell Drummond Riddell and today hosts weddings and community functions.

What did colonial Darling Point look like?

The census states there were 709 people living at Darling Point by 1891. Contrast this with the 2021 census, where almost 4000 residents were recorded, and you get a sense that the area must have appeared sparse in comparison.

In colonial times there were fewer people still, and paintings give us a glimpse into what the new suburb might have looked like. One early work by Robert Russell shows a few modest buildings, washing hung out to dry, and three figures crouched on a basic dirt road. The watercolour, dated to 1835 and titled “Sketch at Mrs Darling’s Point”, possibly depicts either local indigenous people or some of the labourers who built the fledgling suburb’s new roads.

Another painting from 1846 shows Glenrock on an elevated ridge surrounded by bushland. Other early paintings depict Carthona (built-in 1841 by Sir Thomas Mitchell, Surveyor-General) and Lindesay, similarly surrounded by trees. While some of the colony’s grandest homes were being built here, it was clearly still dominated by the natural landscape.

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Photo credit: Wkimedia

While 2022 has been a forgettable year for the Sydney property market, it’s been a different story in Darling Point.

There’s no doubt that the property news headlines have been gloomy. With the RBA announcing seven straight interest rate rises, buyers across the city became more circumspect and prices fell -10.2% between their January peak and 30 October.

The Darling Point apartment market, however, has been more resilient. While prices are slightly down since peaking in July, the median value remains 14.3% higher than 12 months ago, according to realestate.com.au data.

Meanwhile, Domain reveals that the median value of a two-bedroom apartment in Darling Point rose 20% over 2022 to $2.1 million. The median value of a one-bedroom apartment rose by 39.6%, taking it to $1.34 million. The median value of a three-bedroom apartment fell – 8.2% (after growing 70.4% in 2021).

All properties have seen a significant lift in values since the start of the pandemic, and buyers remain well ahead, regardless of any recent declines, as the table below shows.

Prestige property sales stay strong

We’re finding that there is still incredible demand in the prestige market and that it is here at the top end that sales have been least affected by the broader slowdown. As a result, we saw several building records, street records and even suburb records set over 2022.

The main reason for this is that the market downturn is being driven by a decline in lending. ABS data shows that the number of new loans fell -18.5% in the year to September 2022, including -8.2% in September alone.

This lack of borrowing doesn’t impact the prestige market as much as the first-home buyer and entry-level property market. The general rule tends to be that the more expensive a property is, the less likely a buyer will rely on finance to purchase it.

In the prestige market, it isn’t usually interest rates that have the main impact on demand. This market segment tends to be more affected by factors such as the general health of the economy and share market, the amount of M&A activity happening, and even the value of the Australian Dollar. With the Dollar weaker than it has been, we saw increased activity from ex-pat buyers over 2022 in the prestige market. Many of these were Australians who live in cities such as New York, Singapore, Hong Kong or London and who want a base back home.

Downsizers remain a force

Downsizers were also out in big numbers over 2022 – and for good reason. More and more people see the value of trading in the family home in the suburbs for the convenience of an apartment, often relatively early in their lives – sometimes even while the kids are in the later years of high school. So, not only has this market segment changed, we’re drawing on a much bigger pool of buyers than we were even 10 years ago. There’s even a new term for some of these buyers: “active resizers”.

On top of this, we also see more Sydney-siders wanting to remain in apartments throughout their lives. As their children grow, they tend to upsize the size of their home rather than move to a house further from the city.

All of these buyers tend to demand more space and often look only for three- or four-bedroom properties. There are simply far too few quality apartments in Sydney to satisfy their demand.

What to expect in 2023

Given its status as one of Sydney’s blue-chip markets, Darling Point has proven incredibly resilient over 2022, despite wider slowdowns. We expect that it will continue to outperform the market in 2023.

At the top of the market, demand remains relatively strong, and supply is low. Elsewhere, we expect greater activity levels once interest rates stabilise and confidence returns. We also anticipate that investors, who have been notably absent from the market over the past couple of years, will begin to return, stimulating the entry level market of one and two bedroom apartments.

After all, in the rental market, vacancy rates are dropping – the Sydney-wide is now just 1.3% – and rents are rising. As a result, SQM Data shows the median yield for apartments in postcode 2027 is now a healthy 5.6%.

We think conditions are set for a good 2023, although we don’t expect the market to heat up to the point where we see prices across the board run away in the same way they did in 2021.

Want more?

If you’d like to know more about the Darling Point property market, or if you need help buying or selling a home, get in touch.

Sydney’s property market has been experiencing challenging times this year.

The city’s median value has fallen -9.0% since its January 2022 peak, according to CoreLogic. But, here in Darling Point, property prices remain relatively strong. Realestate.com.au data shows our suburb’s median apartment value is still 31.1% higher than 12 months ago – making ours one of Sydney’s best-performing areas.

We explore what’s happening in the market and explore Darling Point property values have held up well, despite a broader downturn.

A snapshot of the Darling Point property market

Domain provides the following snapshot of where the Darling Point apartment market currently stands, based on the past 12 months of sales. Unfortunately, there isn’t enough data on house sales to draw any conclusions.

For me, one thing that stands out is that our local auction clearance rates are well above that of Sydney more broadly. For the week of 1 October, the Sydney-wide auction clearance rate was 56%, while Darling Point is tracking a minimum of 10% higher.

One reason for this, as the table also shows, is the low amount of stock on the market.

This lack of stock has been a defining feature of our local property market over the past few years. In fact, there are consistently half as many listings now compared with a decade ago.

Given that the laws of supply and demand set property prices, this short supply has helped keep prices high in our area even as demand across the property market has slowed.

How much have Darling Point property prices grown since the pandemic?

Domain also gives us data on the growth rates for different property types over the past few years. This presents us with some interesting insights into the local market.

* Two-year growth not three.

As this shows, the value of local one-bedroom and two-bedroom apartments has continued to grow this year. However, the value of three-bedroom apartments has fallen slightly.

On the other hand, three-bedroom apartments also experienced the largest gains in 2021. Three-bedroom apartments are particularly popular with downsizers, who form one of the most important buyer segments in our local market. And over the past couple of years, this buyer group has helped push values to record highs.

The relative success of one- and two bedroom apartments over 2022 could also be because we’re starting to see both investors and first-home buyers return to the market. Both buyer segments tend to be more active in this part of the market and ABS data shows that new loans to first-home buyers actually increased in August.

Is this a good time to buy and sell property in Darling Point?

It pays to remember that buyers are also usually sellers, and vice-versa. When you sell your home, you generally have to also buy somewhere to move into. That means selling in a runaway market isn’t necessarily the best thing as a buyer – rising prices when you buy can negate many of the gains you make when you sell.

Both Domain and realestate.com.au’s data show that this could be a great time to buy and sell property in Darling Point. We’re not seeing the same heat in the market that we saw early this year and last year – which means that, as a buyer, you’ll have more time to choose the perfect next home. At the same time, we’re not seeing the big price falls that some parts of Sydney have experienced. Values are relatively stable, and a lack of stock means vendors will usually sell, so long as they’re patient (average days on market for units has lengthened to range from 58 according to realestateinvestar.com.au to 70 days according to realestate.com.au) and have reasonable price expectations.

For these reasons, it’s in a market such as this one, where there is a reasonable balance between buyer and seller, that it often makes sense to make a move.

Want more?

If you’d like to know more about the Darling Point property market, or if you need help buying or selling a home, get in touch.