A $90 million, nine-storey apartment building could be coming to Awaba Street. Planning documents lodged with the New South Wales government confirm the project will proceed regardless of what Mosman's draft Masterplan says. That's because the Masterplan – the council's attempt to shape how and where new housing is built across the suburb – is still being developed, and state government planning laws won't wait for it. The developer lodged its state-significant development application three days after the Masterplan's public consultation closed.
It is the largest single residential development ever proposed for the suburb. And it is far from the only one. Across Mosman and Neutral Bay, a wave of amalgamations and development applications is reshaping streets that have barely changed in decades. The NSW government's rationale is straightforward: more homes mean lower prices and greater affordability.
However, new research from the e61 Institute has put that assumption under scrutiny.
What the research found
e61 examined Sydney's largest apartment supply expansion on record – the 2018-19 construction boom, when apartment completions spiked at more than double their annual average since 2000. If the government’s theory is correct – that more supply drives down prices and improves affordability – this 2018/19 boom was the moment it should have been visible.
But the data revealed a more complicated answer.
In areas with higher apartment supply growth, apartment prices did rise somewhat more slowly. But the effect was modest, and it did not spill over into the house market. As the graph below shows, detached house prices in the same areas actually grew faster than in lower-supply areas during this period.
That’s because the two markets are largely segmented. They respond to different demand pressures and different buyer cohorts. Of course, evidence does not prove that apartment supply had no effect. But it does cast some doubt on whether large-scale apartment construction can reliably lower house prices in a market like Mosman, or moderate them meaningfully compared to other forces at work.
Why this matters for Mosman specifically
The NSW government's Low and Mid-Rise Housing Policy (LMR) and the state-significant development pathway now being used on Awaba Street are premised on supply being the main driver of affordability. However, the e61 research suggested that even record supply growth was only 20-50% of what would have been needed to bring Sydney price growth down to inflation over the 2012-19 period.
Mosman, in particular, has other factors at play, in addition to simply a lack of supply. Firstly, the suburb is constrained by topography, heritage protections and an already limited stock of detached houses. A family looking for a four-bedroom house near Balmoral is not going to buy a new two-bedroom apartment on Awaba Street instead. The research confirmed that these are clearly separate markets, driven by different buyers with different motivations and budgets.
Secondly, the research found that one possible explanation for why house prices grew faster in areas of higher supply of apartments was that houses became rarer as they were demolished to build apartments, creating an imbalance between supply and demand, which put upward pressure on prices.
It might be too early to say whether that pattern will repeat itself in Mosman. But it is a possible outcome for the current trend of amalgamation.
What does this mean for property owners in Mosman?
None of this is an argument against the development that is coming. The Awaba Street project will proceed, as will others across the LGA, and new housing supply is not without value. But property owners in Mosman and on the Lower North Shore should be clear about what the supply wave does and does not change.
For owners of detached houses, the evidence suggests that large-scale apartment construction nearby is unlikely to put meaningful downward pressure on values. For those considering selling into a market where developer interest is high, the planning changes create a question about timing and pricing strategy that is important to discuss before a decision is made.
The team at Richardson & Wrench Mosman/Neutral Bay is happy to talk through what this means for your property. Call (02) 9969 7622 or email info@rwm.com.au.