The deadening hands of government are closing in on the crazy Sydney property market

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Sydney has one of the hottest property markets in the world right now. With a state election due at the end of March, problems with housing affordability are major the economic talking point in the city’s front bars and over kitchen tables.

Median house prices in Sydney smashed through the $1 million mark last year, contributing to the NSW capital being named among the five most expensive cities in the world.

This chart from Core Logic, released earlier this week, shows the insane growth of Sydney prices in the current housing boom:

Policymakers in the state and federal government, as well as financial regulators, have been largely watching from the sidelines so far. But that appears to be changing. Consider, in just the past few weeks:

Since last year, too, the banking regulator APRA has also been intensifying its oversight of mortgage lending.

These measures don’t alter the fundamentals of high demand and cheap finance which are driving the price growth. Altogether, it barely registers as a “tap on the brakes”. But politicians and regulators are showing an increasing willingness to make decisions, rather than just sit back and watch.

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