As Sydney house prices rise, some developers are continuing to hold back their best properties for their own use or better offers later.

Peter Li, managing director of Plus Agency, a marketing agency for real estate projects, said developers were rejecting offers up to 75 per cent higher than the median price in the suburbs.

In Burwood, we are selling two newly built duplex row houses, he said. Despite having received $4.2 million in offers, the small developer has decided to hold one of them until at least next year before selling and moving in. That's 75 per cent higher than the $2.4 million median home price for a four-bedroom in Burwood.

Lee also revealed another example of a buyer who offered A$4.3 million for the last four-bedroom townhouse in Lindfield's luxury Wolseley Eight development. The developer declined ...... even though the bid was 26 per cent higher than the median price of $3.4 million for a four-bedroom home.

The developer wants to keep the home for the next 12 months, pending completion of construction.

The other homes have already been sold. The developers believe they have enough time to sell this home, and there are no other comparable decks that can be built for the same price, so the longer they wait, the higher the price is likely to be.

Louis Christopher, owner of SQM Research, says developers tend to grab the best option.

He said, "I recently bought a property in Airlie Beach that was initially offered to the developer's chief financial officer." So far, it's one of the best properties on the block.

Mr Christopher said that while there was no data on this, he believed it was common among developers.

I think a lot of developers reserve top units for themselves or their employees, he said. When new flats come onto the market, like new cars, they tend to depreciate in value in the first few years.

They then start to appreciate in value, so some developers want to keep them as part of their long-term portfolio.

They usually want to buy the best units at the highest price, so they let the market decide. These flats are often the most exclusive options or are penthouse duplexes which can be worth millions.

The fact that developers are holding stock also shows that they are confident in the quality of their stock.

While this is a sign of confidence, it can also annoy potential buyers, he says. Being the best units, this could be the ones they use for marketing and therefore misleading.

"Everyone is trying to make money and developers are motivated to make a profit, so if it's worth holding on to for the long term, they will do it. At the end of the day, it's all about individual cash flow and making sure the lender can repay the loan."

Developers have poured years of work into their projects and are often keen to hold on to the best homes out of "pride or affection", says Mr Lee.

There is also an economic reason. Every developer knows that construction costs are rising. The homes they build now cost less than those they build later. If they keep the house for another 12 months, this factor alone can increase the sale price by 10 per cent or more.

The situation is likened to the common investment advice "buy low, sell high."

"You could say that a developer who started a project a year or two ago bought low because it was cheaper to build then. Now they're waiting to sell high," he says.

If you bought land and started construction two or more years ago and you're not under financial pressure, then you want to hold because your project is much cheaper to build than any new project coming up, he said.

Because your project is much cheaper than any upcoming new project.

This is especially true of large luxury homes, such as four- and five-bedroom townhouses. These homes are more expensive now than ever, but basic logic suggests that they will be more expensive in the future.