Some say high end properties fall harder in a downturn.

Some say good properties are more resilient in a downturn.

Which is it?

To reconcile these two seemingly conflicting views one needs to delve into the nuance of what they’re saying.

Some journalists will define “high end” by price – i.e. the top quartile of properties by value.

In Sydney that means any house above roughly $2.3M.

Now while every house in Bondi is worth over $2.3M, not every house in Bondi is a “good property”.

Indeed, at every price level there are “good properties” and “inferior properties”.

I wanted to share a simple framework I use to think about how the spectrum of properties within a particular little segment absorb shocks — and why not all properties are affected equally.

Imagine a simplified world where there are 10 properties priced from $11m to $20m, and 10 buyers with matching budgets. In a balanced market, every property sells at its asking price.

Now remove one buyer. The property at that price point suddenly has no one to buy it, so the seller is forced to discount. That seller drops their price by enough to attract the next buyer down — but that buyer was the only person who would have bought the cheaper property below, so that seller also must discount. The pressure cascades downward until it hits the bottom of the market.

The critical insight: the cascade always flows down, never up. Properties above the missing buyer are completely unaffected. Properties below absorb the pain.

What this means practically:

– A premium property needs almost every buyer in the market to disappear before the seller faces any pressure.

– A bottom-of-market property only needs one buyer to drop off.

– The higher the property, the larger the buffer against a market downturn.

This is obviously a simplified model — it doesn’t capture scenarios where all buyers see their budgets shrink simultaneously (either by force or choice), for example. But it’s a useful lens for thinking about which properties are most resilient when conditions tighten.

Happy to talk through this in more detail if useful.