A three-bedroom house with 1980s decor fronting directly onto Mort Bay at 7 Gilchrist Avenue, Balmain East, sold for $2.12 million. The reserve had been $2.05 million.

A crowd of about 50 people watched as two parties battled it out, with bids of $20,000.

The selling agent, Danny Cobden, of Cobden & Hayson, said the sale was just one of many waterfront opportunities being picked up by savvy buyers.

''I think there is a sense that in the general market things have bottomed and now is a really good time to step back into the market,'' he said.

''We've had some good waterfront sales over the last couple of weeks. Only two weeks ago we sold a waterfront in Louisa Road for close to $4.5 million, so that's really got to provide some confidence for the upper end of the market.''

Buyers also flocked to Elizabeth Bay where a three-bedroom waterfront apartment sold under the hammer for $1.3 million though Darren Pearce, of BresicWhitney.

The apartment, at 3/65 Elizabeth Bay Road with unobstructed views over Rushcutters Bay, was listed with a price guide of more than $1.2 million, with the reserve set at $1.3 million.

Things were a little different at Palm Beach.

Potential buyers kept their hands down and the property at 38 Iluka Road was passed in after a vendor bid of $4.5 million.

Andrew Mappin, of McGrath Palm Beach, remained positive, despite the property failing to sell.

''We had families there, there were retired people looking at it … there are people out there and if properties are well priced they will sell,'' he said.

The asking price for the home was reduced to offers over $4.75 million in August. Adjoining Snappermans Beach, the six-bedroom, four-bathroom home first hit the market in 2010 when the owners were seeking about $9 million.

Neighbours have secured as much as $7.2 million while the highest sale on the strip was in 2007 when Uncle Tobys founder Doug Shears paid $15 million for a 1000 sq m holding.

But in the past few years the Palm Beach market has changed considerably. APM said the median house price for Palm Beach peaked in 2006 at $2.97 million. The 12-month median house price leading up to July was $1.9 million - 56 per cent lower than the 2006 median.

Even on Wolseley Road, Point Piper, the world's ninth most expensive street, expectations are being revised. There were hopes of more than $55 million when accused murderer Ron Medich's waterfront property hit the market 18 months ago. Now offers of about $45 million are being sought.

Listing agent Bill Malouf said ''There's a bit of expectation revision going on. There are great opportunities to upgrade to the waterfront for those paying 20 per cent less than what they would have paid 18 months ago.''

Yet top-end sales have been occurring. In May, Deauville, a circa 1935 five-bedroom Point Piper residence with frontage to Lady Martins Beach, was sold for about $13.6 million.

In Mosman there has been considerable activity on Shellbank Avenue, with two recent high-end sales.

The sale of No. 13 fell short of its original $12 million asking price at $10.1 million, while No. 25 is understood to have sold for more than $13 million, against expectations of $14 million.