- Sydney, the country’s most expensive property market, has set new property price records, according to new CoreLogic data.
- The median house now sells for over $1.06 million while the median dwelling price has hit almost $900,000.
- It follows a 5.7% surge since October, with head of research Tim Lawless noting price growth “highlights the challenges for non-home owners looking to participate in the housing market as values rise faster than incomes.”
- Visit Business Insider Australia’s homepage for more stories.
The harbour city has cemented its status as Australia’s most expensive and explosive property market, as it surpasses its own sky-high watermark.
The latest price data shows Sydney prices are now above their previous peak set in 2017, having gone on a six-month tear.
According to CoreLogic, the median Sydney house price now sits at a record $1,061,229 and the median dwelling meanwhile goes for more than $895,000. Despite unit prices sitting $738,000 however, they remain down on the previous peak.
“The recovery trend in Sydney following the 15.3% decline from July 2017 to May 2019 was interrupted by COVID-19, with housing values falling by -3.0% through the worst of the pandemic,” head of research Tim Lawless said.
“Since housing values found a floor in October last year, Sydney home values have risen 5.7% to reach a new record high today.”
In fact, while the pandemic may have taken the wind out of the market momentarily, it has only ballasted it since.
Government stimulus measures put an additional $200 billion into household savings while forcing the Reserve Bank of Australia (RBA) to cut interest rates to their lowest in Australian history.
Meanwhile more than a few home deposits likely benefited from fewer spending opportunities during the year, while fears of financial insecurity may only have deepened the resolve of buyers to get into the market no matter the cost.
While homeowners might be rubbing their hands together at the news, it will only further frustrate those would-be homebuyers who have witnessed first-hand how hot the market has gotten.
North of 80% of properties are selling at auction, as a flood of buyers try to outbid each other over what is effectively a trickle of homes on the market.
Little to stop prices from climbing higher
Showing few signs of abating and coupled with record low interest rates, this new price peak could just as likely shoot higher again and again in the coming months.
While mortgage rates are at their most accomodating level for owners, new lending records set each month highlight just how much cheap money is pushing prices higher and squeezing out buyers with less financial firepower. The federal government’s infallible desire to loosen lending standards all the while won’t help.
The price movement, as Lawless notes, “highlights the challenges for non-home owners looking to participate in the housing market as values rise faster than incomes.”
Indeed, that has become something of a catch-22 for the RBA. The central bank has committed to keeping the cash rate where it is until unemployment normalises and wage growth returns from a years-long hiatus.
While both of those objectives are years away by the RBA’s own estimation, those same low rates will likely push prices higher in the interim.
House prices are outside of the central bank’s purview. But debt, and certainly unsustainable debt, remain a major concern.
Just last month, the New Zealand central bank stamped on lending restrictions after home prices soared 20% last year. However the fact that in Australia, it is owner-occupiers snapping up properties and not investors as in previous cycles also dampens the appetite for intervention.
If Sydney and other major markets keep up their current momentum, something will eventually have to give.
Business Insider Emails & Alerts
Site highlights each day to your inbox.