The median house price rose 2.1 per cent to $1,627,625 in the March quarter,the latest Domain House Price Report,released on Wednesday,showed – the first time the market has cracked $1.6 million. It is 12.8 per cent – or $185,000 – higher since bottoming out in December 2022.
Meanwhile,the median unit price rose 1.9 per cent to $806,137 in the same period. It has recouped $55,000 of the $59,000 value lost during the 2022 downturn. It is just $4000 shy of its December 2021 peak.
Most pockets of Sydney have recorded higher median house prices than three months and a year ago.
The inner south west,which takes in the suburbs of Wolli Creek out to Bankstown Airport,recorded the highest growth over both periods,reaching a median of $1.55 million. It jumped 7.6 per cent in the first three months of 2024 alone and is up 22 per cent in the year to March.
Unit prices led the way on the northern beaches,surging 7.1 per cent in the March quarter and 11 per cent in the year to March to a median of $1.2 million.
Domain chief of research and economics Dr Nicola Powell said Sydney house and unit prices have risen for five consecutive quarters – momentum not seen since the lockdown years.
Sydney house prices are now more than twice that of units,a record gap that pointed to well-heeled buyers driving demand in a tight market.
“We’ve seen an undersupply of housing. It also tells us who is active in the market. You’ve realised strong equity gains and are perhaps less sensitive to interest rates,” Powell said.
“It’s people who have a large buffer or a deposit to facilitate that purchase. That can be said for people who are already in the market or first home buyers with the bank of mum and dad behind them.”
She said while house price growth was slowing in momentum until rate cuts occurred,unit price growth was picking up as more buyers chased more affordable homes.
Prospective buyer Danielle Johnson and her partner have spent the past 18 months trying to get into the market to no avail.
“What we’ve seen with the market is areas that felt attainable at the start have quickly become unattainable,” said the 33-year-old. “We’re seeing a lot of interest at open houses,a lot more registered bidders.”
Danielle and her partner have spent 18 months looking for a home despite compromising over that time.Sam Mooy
She said they have reassessed what they could afford,locations they are interested in and even the home they are willing to buy as prices have continued to rise.
“So things that might have previously been a dealbreaker are not a dealbreaker in this market any more,” she said. “It’s just continued to rise and rise. It’s tough,and honestly,it’s tempting to just go,‘Let’s go rent’,but the rental market is not stable either.
“The smart thing to do is just to continue to save as much as we can and work on that budget and continue looking,but it’s been a long search.”
AMP Capital chief economist Dr Shane Oliver said the key driver of Sydney house price growth was a chronic shortage of homes.
“We’ve had record levels of immigration,Sydney also has very low vacancy rates and a lack of supply. The lack of rental properties has flowed on the home buyer market and has swamped the impact of higher interest rates,” Oliver said.
The prospect of rate cuts alone has encouraged enough speculation to spur on interest and bring forward buyer demand in the first quarter of 2024 as buyers try to get ahead of competition,Oliver said.
“The resilience has proven to be very surprising given that the rise in interest rates should have acted as a dampener,” he said.
He said the latest increase in Sydney property prices was a continuation of cashed-up buyers leading the charge.
“The money is coming from I suspect a combination of the bank of mum and dad,cashed up older buyers and some of it would be foreign money,” Oliver said. “It has occurred on much lower transactional volumes. The money is not coming from the banks. It’s coming from other sources.”
Ray White NSW chief auctioneer Alex Pattaro said median house prices in Sydney’s inner south west had surged because it was $857,500 cheaper than its neighbouring region of the inner west.
“When you compare it to other markets in Sydney,it still remains exceptional value. You’re going to get a whole lot more in the inner south west than you would in the inner west,” Pattaro said. “People are settling for 15 minutes further west versus paying $1 million more.”