Air Rights Sales Grow in High-End Suburbs

Airspace above buildings is becoming a new focus in Australia’s property market as wealthy homeowners spend millions to protect their views from nearby developments. This trend is aimed at preserving long-term privacy and waterfront outlooks, but it may restrict future housing supply in some of the most sought-after areas.

Air rights, which give the legal ability to buy undeveloped space above a property, are increasingly being used in residential areas such as Sydney’s Rose Bay. New planning reforms that promote higher-density housing are driving this shift. As authorities look for ways to relieve a national housing shortage, premium suburbs are facing the prospect of more mid-rise construction. In response, affluent residents are acting quickly to secure their sky views before they are lost.

In one case, a new development approved under updated zoning laws could have reached 6 storeys or even 8 with added affordable housing. However, the project is now capped at four storeys because a nearby homeowner purchased the airspace above the site. This ensures their views and privacy remain intact. This form of vertical subdivision, once rare in suburban areas, is becoming a powerful tool in property negotiations.

The cost for these deals varies, but in high-value suburbs like those in Sydney’s east, air rights can sell for $10 million to $20 million. Buyers often register caveats that secure restrictions on building height, giving them lasting protection for their views. This can also increase the value of their own property without needing to build anything. While common in cities like New York and Hong Kong for commercial towers, air rights are now gaining popularity in elite Australian neighbourhoods that are experiencing rapid zoning changes.

Recent reforms from the NSW government now allow higher-density housing such as terraces, townhouses and apartment blocks within 800 metres of 171 major transport hubs across Sydney, the Central Coast, Illawarra and Hunter regions. In the past, more than half of Sydney’s medium-density zones banned apartments. These changes are meant to ease housing shortages close to public transport, but they are also shifting who has control over future developments and their height.

However, not all areas are expected to see increased air rights trading. Experts believe this strategy will mostly appeal to ultra-wealthy buyers looking to protect expensive harbour views. In places like Lakemba or St Marys, these deals are not likely to offer enough return to make sense. For now, airspace deals appear set to transform Australia’s most exclusive neighbourhoods rather than serve as a solution to the country’s broader housing crisis.

Source: Australian Financial Review, Jones Real Estate, Sunstate Property