One of Australia’s most sought-after areas has “bottomed out” despite house prices falling across the nation, according to a real estate agent with more than a decade at the top of the Australian property market.
Alexander Phillips, of Ray White Phillips & Co, sat down for the Property Insights podcast with Executive Chairman of Yellow Brick Road Mark Bouris where they discussed what was happening in Sydney’s Eastern Suburbs.
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The appearance came as new data revealed the Harbour City’s property market is plunging at a pace not seen in four decades and Australia’s biggest bank dramatically downgraded its property outlook, warning Sydney is facing one of its “quickest and deepest” housing crashes in at least 20 years.
Commonwealth Bank said national home prices are expected to plunge 9 per cent peak-to-trough, with Sydney and Melbourne copping the brunt of the downturn at 13 per cent and 12 per cent drops respectively.
However, Mr Phillips believes the worst of the price slide in Sydney’s eastern suburbs is already over, declaring that the high-end market officially “bottomed out” in mid-July.
“We’re not seeing the market slide anymore in all price ranges, because I think what’s happened is the media’s finally beaten up the market enough that the vendors got in alignment with the buyer pool,” he said.
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“The buyers have gone, ‘OK, now the vendors are in alignment, it’s not falling anymore. Let me get on, let’s buy.’ So we are now seeing not price growth, but definitely stability.
“It’s a lot more consistent than what it was in, say, May and June, which was probably one of the hardest markets I’ve ever seen.”
Bouris appeared taken aback, saying it was “amazing” given what analysts had told him about the wider property market in Australia continuing to fall.
Mr Phillips, whose average sale price sits between $5 million and $7 million, said that while headline figures across Sydney suggest a 5 to 10 per cent drop, the reality on the ground at the upper end of the market has been far steeper.
“We’ve definitely seen I’d say close to a 15 per cent drop in some prices,” Mr Phillips said, adding that an estimated 80 per cent of home buyers who bought between 2021 and 2026 are currently sitting on paper losses or taking offers lower than what they originally paid.
‘Never seen this in 24 years’
Mr Phillips also said there was an unprecedented shift in investor sentiment, driven by buyer frustration with government tax changes and cost-of-living headwinds.
“Something that I’ve never seen before in my 24 years of selling real estate in the last three months is more people calling saying we’re not buying anymore in Australia. We want to buy outside Australia,” Mr Phillips said.
He said affluent buyers are increasingly looking to relocate or move capital into tax-friendly offshore markets such as Singapore, Europe, New Zealand and Dubai.
“It’s actually more people going out than coming in as buyers in the last few months,” he said.
“People are fed up with the government, I think. Unless a new government comes in and unwinds what’s happening with the budget, it could be pretty disastrous for the investment market.”
Bouris said he had heard similar stories, saying even those whose properties were grandfathered under the current rules are going to see their returns impacted.
“It just means the tax rate you pay on the gain you make will be less, but at the same time, you’re going to make less gain because everybody’s affected,” Mr Phillips agreed.
He suggested that holding property purely for capital gains may no longer be attractive.
“If you’re selling a house and … you own it outright for $10 million, in the next five years, I actually think you’re better off probably putting that money in the bank and getting a guaranteed 6 or 7 per cent,” he said.
‘Probably one of the worst suburbs to invest in’
With decades of experience in the eastern suburbs, Mr Phillips warned that now was a bad time for buyers in certain areas.
He warned those eyeing high-density unit developments or off-the-plan builds in newly rezoned pockets like Bondi Junction and Rose Bay, saying there was a risk of oversupply and exorbitant holding costs.
“Bondi Junction is probably one of the worst suburbs to invest in because there’s too many new towers being built,” Mr Phillips cautioned, pointing out that ongoing strata, concierge, and amenity fees in luxury towers can cost owners $20,000 to $30,000 a year just to run.
He dismissed developers’ attempts to justify high asking prices based on soaring land and construction expenses — a situation he called the “replacement cost fallacy”.
“We deal with these developers every day saying, ‘Oh, but this is what I want. I want $8 million because the land’s five, cost me three to build.’ That’s irrelevant. The one down the road just went for seven,” he said. “In a hot market, you can (back up pricing). But in this market, no.”
Instead, Mr Phillips recommended sticking to established, character assets in areas immune to sweeping rezoning, such as Paddington terraces or art deco apartments.
“You’re out of the zoning areas,” he said. “They always rent well. They’re not seasonal.”
A new demographic of buyers moves in
The podcast also shed light on shifting buyer demographics in the eastern suburbs.
Mr Phillips said “crypto guys” dominated prestige purchases five years ago, and that the latest wave of home buyers is coming from artificial intelligence and tech entrepreneurs — including a recent $13 million Bronte house sale.
At the same time, wealthy homeowners are changing how they live. Rather than holding onto sprawling $20 million “trophy homes” that cost $200,000 annually just to maintain, empty-nesters in their late 50s are downsizing much earlier.
“They’re selling for 10, buying for five … putting the rest in the bank, paying for kids’ universities,” Mr Phillips said. “People are going, ‘I don’t need to prove anything … just lock up and leave.’”
Looking forward, Mr Phillips expects the market to remain relatively flat, forecasting price movements of “up or down a couple of per cent for the next few years” rather than rapid capital growth.
He also highlighted a potential shadow inventory of unsold homes that could test market stability if relisted simultaneously. In just eight eastern suburbs serviced by his team between June and mid-July, 120 homes were pulled off the market without selling.
For prospective sellers, Mr Phillips offered a simple rule of thumb: “If you’re selling to get the best price, definitely don’t sell. But if you’ve got a reason to sell — like upgrading or moving out — now’s the time to do it.”
You can listen to the full podcast on YouTube