Sydney's median price for three-bedroom unit now $1 million, report says

Three-bedroom apartments now have a median price that rivals the cost of a house in Sydney, new data shows.

And this rise in prices is set to continue as downsizers look for larger units, home buyers compromise a backyard to get onto the ladder and high-quality developments make large units more desirable, experts say.

Over the past five-year property boom, the median price of a three-bedroom apartment increased by more than 50 per cent – to $1 million. For a two-bedroom apartment, the median price in June was $705,000.

While one-bedroom apartments appeal to investors due to generally higher rental yields and lower purchase prices, the two- and three-bedroom apartment market is being driven predominantly by home buyers, architectural firm Rothelowman principal Michael Banak said.

Apartments are now being built with multi-rooms to appeal to “a working couple; a visiting child’s bedroom for downsizers; or enough space for an entire young family,” Mr Banak said.

Larger apartments were also an attractive alternative in many expensive suburbs for those priced out of a house, Property Buyer managing director Rich Harvey said.

“Generally, three-bedroom apartments are a more affordable option for those looking to buy a freestanding house. They might not be able to afford $1.5 million for a house but could pay $1 million for an apartment,” he said.

But large apartments aren’t just the poor cousin of houses, they’re increasingly becoming the first choice for Sydneysiders who want something low-maintenance and well-located, Domain Group chief economist Andrew Wilson said. 

“This data shows we’re still seeing a considerable demand for higher priced and bigger units in Sydney … there are plenty of buyers out there who are happy to live in a unit but they want a bigger unit even at a higher price,” he said.

He predicted there would be more apartments than houses in Sydney by 2030 as the building boom continued. Of all Sydney’s suburbs, 27 have a median apartment price above $1 million.

In some areas, there hasn’t been as much development over the past four years. In Mosman, big apartments are tightly held, Richardson & Wrench Mosman/Neutral Bay director Robert Simeon said.

Three-bedroom apartments in Mosman outpaced the rest of Sydney, with a median of $2.35 million – up more than 20 per cent over the past 12 months.

In Mosman, 20B/2 Brady Street is on the market for $2.4 million to $2.6 million. Photo: Richardson & Wrench Mosman

A three-bedroom, two-bathroom apartment at 20B/2 Brady Street is currently on the market with a price guide of $2.4 million to $2.6 million. The apartment has been on the market for a week and there was already been substantial interest, Mr Simeon said. 

“A lot of people who live in Mosman don’t want to move out [of the area], but it’s 80 per cent houses and 20 per cent apartments,” he said. This means that downsizers have to wait, or buy earlier than they would elsewhere.

“So they’re cherry picking apartments, renting them out with the intention of moving in at a later date [as a retirement strategy].”

For one- and two-bedroom apartments, Darlinghurst was the top performer, up 30 per cent over the year for one-bedroom units and 22.4 per cent for two-bedroom apartments.

While the introduction of the lock-out laws would have contributed to some of this growth, these apartments largely increased because they were desired by many different buyer types, BresicWhitney Darlinghurst sales agent Nic Krasnostein said.

“It’s a broad mix of buyers, with investors, first home buyers, downsizers, people buying to rent out on Airbnb … everyone wants these apartments,” Mr Krasnostein said.

One-bedroom warehouse conversion 4/1 Printers Lane sold for a premium. Photo: BresicWhitney Darlinghurst

A one-bedroom warehouse conversion apartment at 4/1 Printers Lane sold for $1.31 million in June to an owner occupier from Elizabeth Bay. In October 2014, the same apartment sold for $1.1 million.

“It’s because of the depth of buyers for that market for a limited supply, without a lot of development in the area, it’s a rare commodity … that everyone wants,” he said.