Revealed: Sydney house prices soar to new record high

4 weeks ago 11

Home prices have risen sharply since RBA govenor Michele Bullock announced the first of three rate cuts in February. Picture: Martin Ollman

Sydney’s median house price has crossed the $1.6m mark for the first time after shooting up nearly $120,000 over the past year.

Fresh PropTrack data showed Sydney hit the milestone at the end of October after another monthly growth spurt that saw dwelling values climb by an average of 0.6 per cent.

Cumulative growth for the year was 6.4 per cent, which PropTrack noted was “above long-term average” for the market.

The median price of a Sydney house is now $1.62m, up from $1.5m a year ago, while units have a median of $874,000, an increase from about $831,000 at this time last year.

REA Group economist Eleanor Creagh said the rises were powered by three rounds of interest rate cuts this year, expanded government incentives and a growing sense of urgency among buyers.

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These forces have whipped up buyer demand at a time when housing supply has remained constrained, pressuring home seekers to spend bigger sums, Mr Creagh said.

“It’s not just that interest rates have improved people’s borrowing power,” she said. “They have also improved market sentiment and created a sense among some buyers that prices will soon be going up.

“That has probably encouraged a lot of buyers to bring forward their plans to buy in the hope that they can get a home (before) the market rises again.”

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James Hurley, auctioneer from Under the Hammer, calls bids at a recent auction in Hurstville. Picture: Monique Harmer

Ms Creagh added that the federal government’s October expansion of the First Home Guarantee, which helps first-time buyers purchase with deposits as low as 2 per cent, poured further fuel on the fire.

“It has increased demand at a time when there was already rising demand from other buyers, including investors. Stock levels have not risen by the same level so competition has become stronger.”

PropTrack indicated that competition was the most intense across Sydney’s more affordable areas for most of the year but there has been a surge in prices across pricier regions this spring.

The eastern suburbs was the fastest growing market over the quarter, with dwelling prices lifting an average 4.49 per cent.

Other rapidly growing markets were the inner southwest, which encompasses much of the St George area and Canterbury-Bankstown, which had a 3.6 per cent lift in the quarter.

Eastern suburbs agent Angus Gorrie of Ray White Eastern Beaches said many buyers had developed a fear of missing out since the expansion of the First Home Guarantee.

Buyer demand outweights the supply of properties available for sale in most areas. Picture: Richard Walker

“Everyone is terrified of how much the scheme will increase prices around them and they want to get in before it happens,” Mr Gorrie said.

Two Red Shoes broker Rebecca Jarrett-Dalton said uptake of the first-home buyer incentives was coinciding with a lacklustre spring selling season, which meant there were fewer homes to go around.

“Without anything to increase supply, (the scheme) is going to drive house prices up,” she said.

“The market is incredibly hot, and this could lead to a highly competitive environment for buyers, with many homes selling for hundreds of thousands above their reserve.”