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John Parker, who had arrived with his family in the colony in 1828, was the first Englishman to settle in Fairlight. In 1837 he bought 20 acres (8 hectares) of 'land and rocks on the eastern side of the [Manly] cove'. There he established a market garden on part of the ground, where he grew shrubs, and fruit and vegetables for the Sydney markets.
The naming of Fairlight
On 11 May 1853, businessman Henry Gilbert Smith bought 26 acres (10.5 hectares) from John Parker, for £350. He added to the holding with the purchase of additional land from Peter Ellery, operator of the Spit punt, in 1858. The land extended north to what is now Hilltop Crescent. He built a small four-roomed stone cottage, designed by Edmund Blacket, in what is now Fairlight Crescent. Smith wrote in January 1855
I am now spending a good part of every week at Fairlight … it is a most delightful spot, admired by everyone for its beauty. 
This is the first time that the address 'Fairlight' is given. It was the name of the village where Smith's first wife came from near Hastings, Sussex, on England's south coast.
During 1859–60 Smith built a mansion named Fairlight House. Designed by Edmund Blacket, it was built of stone, two storeys high and five windows wide with an encircling ground floor verandah. His second wife Anne died at Fairlight House on 7 April 1866 after only nine years of marriage and Smith returned to England in the following year. The house was rented out, until he sold it and its extensive grounds, to John Woods in 1880. Two years later, Woods, who was the founder of the firm Woods, Shortland & Co, tried to buy the reserve in front of Fairlight House, but this was fought off by Manly Council. In 1884 100 feet (30 metres) in front of the house was resumed for the construction of a public reserve ground. This forms part of the present Manly Scenic Walkway.
The paddocks surrounding Fairlight House were subdivided when the Woods family converted the land to Torrens Title in 1897, leaving Fairlight House standing on just two acres (0.8 hectares).  In 1903, the iron-founder James Bonner, later Mayor of Manly, bought the house, and in 1910 the MacIntyre grazing family bought it, holding it until 1939. It was then sold to a builder, who rapidly demolished it and put up flats. Fairlight Crescent actually crosses over the site of the house.
The name Fairlight was officially given to the suburb by the postal authorities on the suggestion of Les Wellings, Manly Council's Town Clerk during the 1930s and 1940s. However, the name was used locally from the late nineteenth century onwards.
Manly Cemetery is in Fairlight. It is thought to be the fourth oldest cemetery still in use in Sydney. The oldest burial marked by a monument dates from 1863. The Bishop of Sydney, the Right Reverend Frederick Barker, consecrated the Church of England portion on 5 April 1865. Among those buried in the cemetery are the war artist Charles Bryant and the Australian rugby players Tom Richards and Frank Row.
Tentative suburban beginnings
Even by the mid-1890s, very few residents lived in Fairlight. The area was still described as part of Manly, and the sparse scattering of families lived mostly along Sydney Road. The speculative subdivisions of the 1880s land boom generally failed to attract buyers due to transport difficulties and a lack of basic services. Moreover, the Depression of the 1890s ensured that little development took place.
Fairlight Street appears to have first been laid out in the early 1880s as Smith's unsold estate was subdivided following his return to England. It may have been little more than a dusty extension of The Esplanade (west), providing access to the first house in that vicinity, Vista Reale, built around 1880.
Mansions and hovels
A map of the 1886 Fairview Estate shows Mr Broad's house on the south side of Fairlight Street, between Laurence Street and The Crescent; Vista Reale and Bongaree House; the mansions of Mr Strickland and Mr GA Murray (Roslyn Hall); and Mr Evans's 'New House', which was the first in James Street, near the south-west corner of Sebastopol Street (Sydney Road). James Street had two households, including that of the Honourable Edmund Barton, member of the Legislative Council, who was then NSW Attorney-General and, following Federation, Australia's first prime minister.
Thornton Street was named after the Honourable George Thornton (1819–1901).He was Mayor of the City of Sydney in 1853 and 1857 and was a long-time leading citizen of Manly, both before and after the incorporation of Manly municipality in 1877. By 1883, he had built a large mansion, Altamira, at a cost of £3000, on his extensive estate on top of what became known as Thornton's Hill (originally Constitution Hill, later Red Hill) near the present Fairlight shopping centre. When the Thornton Estate was subdivided in 1885, Thornton Street formed part of the new subdivision on the western side of Sydney Road. Local historian Charles Swancott credited Thornton with establishing 'struggle-town', or houses for battlers, on his estate 'near the top of the Red Road (Red Hill), by cutting up his estate into small portions on which were built kerosene tin cottages and case lining villas'. 
Fairlight is bisected by the Sydney Road. The earliest plan for Manly, HG Smith's 1855 'Ellensville' plan, included Sebastopol Street, the western extension of Fountain Street, from West Promenade toward The Spit. Sebastopol Street ended on the 'Heights of Alma' near a proposed Alma Crescent in the vicinity of today's Crescent Street and Fairlight shopping centre. Fountain and Sebastopol streets (and a later Electra Street in Fairlight) were to join and form part of what became known variously as the Main (Sydney) Road, Middle Harbour Road, and, by 1890, Sydney Road. By the mid-1890s development had begun to spread slowly up Constitution Hill and Red Hill through present-day Fairlight.
Trams and accessibility
Just before World War I, the tram route was completed along Sydney Road and side streets began to flourish in the brief prewar boom. By 1919, there were 40 households in Fairlight Street, and the tramline to The Spit made Fairlight land more attractive and accessible. There was a surge in development along the eastern end of Fairlight Street nearest Manly, as well as a rise in its social status. Brighton College for Girls was established in Fairlight Street and Mark Mitchell's Leitelinna (1898–99) became one of Manly's landmark mansions.
The de Russett family of Bellevue (Sydney) Street had a long association with the Fairlight harbourfront, especially around Bolingbroke Parade. Alfred Montagu de Russett ran a leather-dressing factory there between 1905 and 1910. The de Russets purchased several lots in the Fairlight Estate when the London Bank of Australia sold off the land assets of John Woods's bankrupt land development company between 1900 and 1914.
Clifford Avenue and Bolingbroke Parade were first laid out, at least on paper, in the Fairlight Estate subdivision auction in November 1900.  This important subdivision of John Woods's Fairlight House estate created 24 lots on the south side of Clifford Avenue divided by Bolingbroke Parade, and 22 lots on the north side, divided by Bolingbroke and Ashley Parades.
Fairlight's streets and houses
The street names for the Fairlight Estate derive from the word 'cabal', after the small faction of political or private intriguers during the reign of Charles II. They included ministers with the names Clifford, Ashley, Buckingham, Arlington and Lauderdale. According to the historian Percy Gledhill,
Streets bearing such names, with the exception of Buckingham, are in the Fairlight Estate, and in the case of Buckingham, the name Bolingbroke, after Viscount Bolingbroke, has evidently been used, there being a Buckingham Street in the vicinity of Manly Golf Links. 
The area around the intersection of Clifford and Bolingbroke required massive work to create what is now the complex series of stone embankments, public paths, and steps forming Upper Clifford Avenue and upper Bolingbroke Parade.
The house Narbethong was originally built by the prominent Manly builder Frank Tolhurst, the grandfather of author Kylie Tennant, for his newly married daughter Katherine, then living in Rosedale Avenue on the hillside below [Upper] Clifford Avenue. A photo of Narbethong appears in Tennant's autobiography.  Tennant was a pupil at Brighton College for Girls, as was the early aviator, Nancy Bird Walton.
Francis Street was first listed in the Sands Directory of 1887, 'off Middle Harbour Road' (Sydney Road). It was named after the son of the landowner and subdivider, William Murray, a prominent painter and decorator in Manly.
Charles Street appeared in Sands Directory in 1888, along with Cohen Street, off which it runs. The preponderance of building trades in Charles Street reflects both the building boom of the late 1880s and the proximity of the sandstone quarries on Thorntons Hill nearby on Sydney Road (then Middle Harbour Road), and off Francis Street. Edwin Street and adjacent Daintrey Street were named after the lawyer and botanist Edwin Daintrey (1814–87). Edwin Street formed part of the huge subdivision, Daintrey's Manly Estate, auctioned in 1904. The land grants to Edwin Daintrey were made on 2 July 1857, and comprised 12 acres (4.8 hectares) and 11 acres (4.4 hectares) in the Daintrey Estate. A further five small portions facing Fairlight Street were granted to Daintrey on 23 December 1857. Edwin Street's predominant character of workingmen's weatherboard, detached cottages, especially on the western side, remained largely unchanged until the 1980s and 1990s when the area underwent a process of gentrification.
La Perouse Street appeared as early as 1892. It is shown in the subdivision map for the sale of Dalley's Estate, Manly Beach.  However, no development occurred in the 1890s. The land on either side of La Perouse Street was subdivided and offered at auction in December 1902, known as the 'Balgowlah Estate'.
Lauderdale Avenue in Manly was first noted in Sands Directory in 1898 and extended from The Crescent. There were three listings in 1898; John Woods at Fairlight, CH Rolph at The Bungalow and CE Neave at Woodlands By 1900 Charles A Laurence's Dellwood and Henry Maudsley's unnamed home were added. The huge grounds of Dellwood between Fairlight and The Esplanade were subdivided and the house sold in a spectacular auction in 1924.
In 1910, Sands Directory named John and Benjamin Thompson as the proprietors of Thornton Hill Quarry on the south side of Sydney Road, between Woods Parade and Rosedale Avenue (now Hill Street south) perhaps around today's Hill Top Crescent and south Bellevue Street.
By 1910, Norman Pope, the managing director of Farmer's Department Store, one of the largest in Sydney, and a pioneer of Sydney radio, had built a new house in Margaret Street. This street, one of Fairlight's 'dress-circle' streets, was named after Anne Margaret Smith, the second wife of Henry Gilbert Smith. It had first appeared in Sands Directory in 1890. The house, White End, became a landmark in the area. The Pope family were strong supporters of Manly Golf Club. Wattle Avenue was named around 1922, and formed part of the Manly Golf Links Estate. Those attracted by its proximity to the golf course included the Ferrier family. Jim Ferrier was to become one of Australia's greatest golfers.
A number of new small businesses were established along the northern side of Sydney Road before World War I. The Fairlight shopping centre had its humble beginnings in this period, first with Spence's grocery by 1909, then with SA Cooke's butcher's shop joining Guest's grocery by 1914. Cooke's shop, later used by a veterinary surgeon, had a cow's head in plaster above the door to advertise its trade. Daily deliveries were made to local homes in Fairlight. Alf Reid, later to become the state member of parliament for Manly, ran his general store next door to his home May Ville, on the north-east corner of Cohen Street and Sydney Road. In 1920, Berry's Red Hill Estate on the east side was subdivided and auctioned. The 14 lots facing Sydney Road, Fairlight, became shops and a motor garage. The Fire Station building was erected in 1921.
'The Man on the Tyres' at Sinden's Garage was a notable landmark on Sydney Road for many years. This was a column of tyres with a dummy on top and he was given changes of clothes on special occasions. By 1930, another famous landmark, the Manly Gas Company gasometer, could be seen at the bottom of Francis Street on the east side of Balgowlah Road.
In 1949, the Dutch submarine, K.XII, ran aground at Fairlight. During World War II it sank at least three enemy ships, and was also used for reconnaissance work. It was attacked and damaged during the Japanese assault on Indonesia in 1942, and barely made it to the safety of Sydney. It failed seaworthiness tests, so the decision was made to declare it unfit for further service. After the war, the K.XII was sold to private buyers, and the Manly and Port Jackson Steamship Company leased it. They moored it to a purpose-built berth in the harbour pool at Manly, and charged a shilling admission. During heavy seas in 1949, it was decided to tow it to safer waters, and on 5 June 1949 the tug Warang was used to tow it to Neutral Bay. It began to tow the submarine out of Manly Cove into a southerly swell, but wind and swell combined to break the tow-line, and it ran aground on the sand at Fairlight. The four crewmen made it to safety. For a year, the submarine lay beached at Fairlight, a new playground for the children of Manly to explore. A salvage syndicate bought the wreck, and in January 1951 it was finally floated clear of Fairlight Beach, and towed to Balls Head Bay, where initial demolition work was done, and then up the Parramatta River, where it was eventually completely broken up and sold as scrap to Japan. In 1971, remnants of the submarine were retrieved from the waters off Fairlight, including a hatchway cover, and in 1977 a final remnant, one of the submarine's diving-planes, was removed by Council workmen.
 DK Muir, Henry Gilbert Smith 1802–1886 of Manly and Wollongong, Manly Warringah Pittwater Historical Society, Sydney, 1996, p 19
 DK Muir, Henry Gilbert Smith 1802–1886 of Manly and Wollongong, Manly Warringah Pittwater Historical Society, Sydney, 1996, p 46
 C Swancott, Manly 1788 to 1968, D S Ford, Sydney, 1968, p 19
 Fairlight Estate, Manly, subdivision map 8; Wellings Local Studies M5/225 (17 Nov 1900); M5/625 (1 March 1902); M5/57 (2 January 1905)
 PW Gledhill, Manly and Pittwater: its beauty and progress, Robert Day Son and Co, Sydney, 1948, p 169
 Kylie Tennant, The Missing Heir: the autobiography of Kylie Tennant, Macmillan, South Melbourne, 1986, p 88
 Wellings Local Studies M5/332