‘Element of urgency’: Sydney’s median house price hits record $1.75m

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The cost to buy the typical Sydney property is at a fresh record of $1.75 million as interest rate cuts increase borrowing capacity and buyer activity helps propel pricing higher.

Sydney’s median house price rose 6.3 per cent, or $104,130, over the year to September, the latest Domain House Price Report, released on Thursday, showed.

That means prices have risen by $2000 a week over the past year.

The city’s median unit price jumped to $840,422, up 2.7 per cent or $21,716 over the year, also a record.

Domain chief of research and economics Dr Nicola Powell said “momentum has returned” to Sydney’s housing market amid three rate cuts from the Reserve Bank this year, which had improved buyer confidence.

“Changes in the cash rate or economic conditions tend to be amplified through Sydney’s housing market much quicker than other capital cities,” she said.

Low stock of homes for sale remained a factor across the country, with some Sydney buyers trying to avoid auctions by making robust earlier offers, Powell said.

Over the quarter, Sydney house prices rose by 3.4 per cent, while units jumped 1.9 per cent.

Powell said price rises across both units and houses may mean there was a “wide buyer pool being activated”.

This included investors and owner occupiers who wanted to purchase before the Australian Government 5% Deposit Scheme expanded in early October.

Domain chief of research and economics Dr Nicola Powell said momentum has returned to Sydney’s housing market.

“I think there would have been an element of urgency amongst non-first home buyers to get in and make their purchases before the expansion of the scheme,” she said, with particular reference to those looking under the revised Sydney property price cap of $1.5 million.

First home buyers on any income can now use the scheme and purchase with a 5 per cent deposit. Property price caps rose, while the number of places in the scheme were uncapped.

Across Sydney, the strongest house price growth was in the south-west region, up 18 per cent over the year to September, to a median $1,297,500, followed by Baulkham Hills and Hawkesbury region, where the median rose 13.1 per cent to $2 million and Parramatta (up 13 per cent to $1,525,000).

For units, the northern beaches recorded the strongest median price growth over the same period – up 11.7 per cent to $1.34 million. That was followed by the inner west (up 7.8 per cent to $900,000) and the city and inner south region (up 5.2 per cent to $977,750).

Couple Sage Nassar, who works in HR, and Blake Surace, in construction, both in their 20s, are looking to buy their first home.

While they have been approved for a mortgage that gives them buying capacity above what they want to spend, the search hasn’t been straightforward. The couple have seen house prices jump, they don’t want to overpay and are avoiding auctions.

“A few months ago, when we started, it was ‘everything’s a million dollars plus’. Now it’s ‘everything’s 1.1 [million dollars] plus’,” Nassar said.

Couple Sage Nassar and Blake Surace, pictured with dog Pearl, are on the hunt for their first home.

They hope to buy near Rouse Hill, where they live with Nassar’s parents. They plan to rent their future home out so they can get ahead on the mortgage before moving in.

”We are really lucky here that my parents are happy to have us,” Nassar said.

Surace said the cost of potential renovations was a consideration. “It’s not just the house prices any more,” he said, adding the cost to upgrade bathrooms or kitchens had “skyrocketed”.

ANZ economist Madeline Dunk said a resurgence in the Sydney housing market this year had been partly fuelled by rate cuts, accelerating demand and a jump in investor activity.

“Seeing that those rate-sensitive investors are coming back into the market and more broadly, the RBA’s easing policy, has clearly supported sentiment,” she said.

Anthony Landahl, managing director at mortgage broker Equilibria Finance, said his firm had about a 30 per cent uplift in enquiry compared to the same time last year, with interest from investors, owner occupiers and first home buyers.

“A lot of people were sitting on their hands waiting until the interest rates came down. Those investors and home buyers are now active,” he said.

Gareth Croy, managing director of financial advisory firm Your Future Strategy, said rate cuts had driven more purchasing power, while the government scheme changes had prompted increased interest among his clients.

“It’s probably those people who were thinking about it, but really didn’t have any sense of urgency that all of a sudden, went, ‘Oh, I can see what’s coming. Let’s dive in before the tidal wave comes’,” he said.

Powell said more price gains were likely.

“Our expectation is for prices to continue to rise through spring and into summer,” she said.