Median Sydney house prices have grown by $100,000 in just 3 months
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House prices in Sydney – in fact, every capital city outside of Perth and Darwin – set new record highs in the first three months of the year, according to the latest data from Domain.
In an explosive quarter of growth, capital city houses rose by an average of 5.7% in just 12 weeks, but it was Sydney and Canberra that were in a league of their own, growing at a pace Domain has not since it began keeping records in 1993. Senior analyst Nicola Powell said an extraordinary confluence of factors were driving up prices in an unprecedented way.
“Record low interest rates, improved household savings, low listing volumes, post-lockdown lifestyle changes, consumer sentiment roaring to an 11-year high, returning cashed-up expats and government incentives have fuelled demand for housing and a strong market performance,” Powell said, noting national house and unit prices have both hit new record highs.
The median house in Sydney cost $103,000 more at the end of March than it did at the end of last year. With prices up a staggering 8.5%, residents are now expected to fork out more than $1.3 million for a free-standing home.
“This has pushed annual house price gains into double-digit percentage growth, making it the steepest increase since the lead up to the previous price peak in mid-2017, at 12.6%,” Powell said, noting higher-end markets in the eastern suburbs and northern beaches were leading the charge.
A three hour drive away, a similar phenomenon is happening in the bush capital. Canberra is now on track to soon overtake Melbourne as the country’s second most expensive market, after prices soared by more than $80,000 in just three months. Again, Powell notes this is the “fastest quarterly acceleration” of prices on record.
“This has pushed annual house price gains to 19.5%, the steepest annual increase in 17 years. Canberra is a breakaway performer compared to the other capital cities, recording the strongest annual and quarterly house price growth,” she said.
While prices in both cities are growing at breakneck speed, a similar story is unfolding in most capitals aren’t far behind. Darwin house prices rocketed 9.1% higher over the quarter, followed by 7.6% in Hobart, and 4.8% in Melbourne. Adelaide and Perth have grown at a far more modest rate, as prices lift 3.7% and 2.4% apiece, while Brisbane has barely moved by comparison at just 1.7% growth.
The growth across every single capital has puts “more affordable cities” like Adelaide and Perth at new record highs. After 12 months of bumper regional sales during the pandemic, it appears momentum is again flowing back to capital cities as they again began to outgrow the country.
“Regional areas with good connectivity to employment hubs are likely to continue to perform well, but as regional prices rise and city offices return, the demand may soften,” Powell said.
While it largely been houses that have soared over the last 12 months, the apartment market also appears to be gaining strength in some parts of the country.
Powell noted the “outlook has improved” for Sydney units after languishing for much of the last year, as prices began rising quicker to grow 2.2% over the quarter. Despite coming off sky high vacancies rates in inner Melbourne, apartments the Victorian capital still managed to mint a new record high at around $568,000, making it the only capital to do so. Perth apartments meanwhile have roared higher again.
“Units notched a third consecutive quarter of growth, up 3.9%. This uninterrupted run of price growth has not occurred since 2013 in the lead-up to the previous price peak reached in 2014,” Powell said, noting that they would need to continue growing at this rate for another year before breaking that previous peak.
In parts of the sunshine state, units are taking off even as they continue to fall in Brisbane.
“Units on the Sunshine Coast jumped 10.2 per cent over the quarter to $550,000, 18.3 per cent higher than last year. This is the quickest rate of price increases in roughly 17 years,” Powell said.
For the most part though apartments appear to have largely diverged from house prices, growing by a modest 1.8% nationally while falling 5% in Canberra, 1.8% in Darwin and 0.5% in Brisbane.
As houses become increasingly expensive in each capital city, more would-be buyers may have to be thankful for that at least.