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Sydney house prices hit record high, with median climbing to almost $1.5 million

Sydney property prices have climbed to record heights yet again, with the median house price now just shy of $1.5 million and the typical apartment costing more than $800,000.

Greater Sydney house prices jumped about $720 per day over the September quarter to reach a record median of $1,499,126, the latest Domain House Price Report, released on Thursday shows.

Annually, the median is up a massive 30.4 per cent, or about $349,000, over the year to September, marking the strongest annual growth since Domain records began in 1993 – with prices in half a dozen regions rising at least $500,000.

While Sydney’s housing market had seen phenomenal growth — house prices have risen more than three times faster than unit prices over the year — the pace of the price hikes has eased substantially, said Domain chief of research and economics Nicola Powell.

Keeping up with such price rises in a low-wage growth environment was impossible not just for first-home buyers, but a growing number of upsizers, Dr Powell said, noting lending to both had pulled back since March, while investor lending had increased.

Such rapid house price rises were pushing more buyers into the apartment market, which is now also at a record high median of $802,475.

Record low-interest rates have fuelled stronger than expected price growth, with NAB last week becoming the latest of the big four banks to increase its price forecast yet again, now predicting Sydney dwelling prices to rise 27. 5 per cent this calendar year, and 5.4 per cent next year.

“I wouldn’t say [the boom] is over but the rate of growth has peaked and will slow back to something more normal,” said NAB chief economist Alan Oster.

Prices growth would continue into early next year, before plateauing, Mr Oster said. This would be driven by affordability constraints and rising fixed-term interest rates, he added, rather than next month’s increase in the minimum interest rate buffer banks use when assessing the serviceability of home loan applications – reducing maximum borrowing capacity for the typical borrower by about 5 per cent.

However, Mr Oster noted he would seriously revise down his forecast if a potential clampdown on high debt-to-income ratio loans was introduced, as it would “kill” investor activity and have a big impact on first-home buyers stretching themselves to get into the market.

Median house prices across all Sydney regions, bar the eastern suburbs, have hit record highs with the largest quarterly jump in the inner west, where prices climbed 9.7 per to a median of $2.3 million. Six Sydney regions saw prices jump by at least $500,000 over the year.

Such rapid price growth was “scary and obscene”, said Douglas Driscoll, chief executive of real estate group Starr Partners. It was leaving first-home buyers increasingly reliant on the bank of mum and dad or looking to rent out their first home. A growing number are turning to other cities and regions.


Markets like the Hawkesbury had been going gangbusters, as more people took the opportunity to move to the city’s outskirts and lifestyle locations during the pandemic, he added, but noted a wide variety of homes in the region could also skew the median depending on the types of properties sold over the past quarter.

“APRA are on the sidelines making a few tweaks but I think it’s going to take something a bit more substantial…to have any serious impact,” he said.

“It’s too aggressive and something needs to happen … it can’t’ run that hot,” he said, adding while the word bubble was taboo, price hikes of 40 per cent plus in the year had to be close to that territory.

Selling agent Matthew Carvalho, a director at Ray White Glebe, said a post-lockdown increase in the number of homes for sale was giving buyers a little more choice but was unlikely to have much impact on prices due to the backlog of demand. Homes that catered to both upsizers and downsizes were particularly sought after, he added.

Among those hitting the market are Glebe sellers Jan and Rowan Davies, whose beloved three-bedroom home of almost two decades will go to auction with Mr Carvalho next month with a guide of $2.2 million. They have seen homes in the area sell for hundreds of thousands of dollars above reserve prices in recent months, but are conscious of not setting unrealistic expectations, as agents report some vendors are getting ahead of the market.

The couple, who are keen water sports aficionados, have delayed plans to downsize to the northern beaches, and will instead move to a nearby investment property, in hopes rapid prices gains may stabilise down the track.

“The price rises in the northern beaches, in comparison to where we are in Glebe, have just been phenomenal,” Mr Davies said. “We’ll get half the size and half the value on the beaches.”

Mrs Davies added: “Some properties are going so far and above what is expected … goodness me, it’s going to be hard for those [first-home buyers] who aren’t already in the market.”

Meanwhile, in the eastern suburbs, house prices fell a slight 1.9 per cent over the quarter, making it the first region to see a quarterly decline in house prices this year, Dr Powell said.

Having reached a record $3.67 million by June, the median house price pulled back by $70,000 over the September quarter, though was still up 27.4 per cent over the year.

“While the eastern suburbs is an expensive market, every area has a ceiling in terms of price growth … and it saw the strongest rate of growth over the first six months of the year. We know the upper end of the market leads … and this could be another sign that the market is starting to turn,” she said.

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