Sydney house prices soared to a new record of $1,309,195 after jumping $103,000 over the March quarter, or 8.5 per cent. This is the fastest quarterly acceleration of house prices since Domain records began in 1993. 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 per cent. Houses at the upper end are leading the charge, with the strongest quarterly gains recorded in the eastern suburbs, northern beaches, Baulkham Hills and Hawkesbury. All Sydney regions have hit record high house prices.
Over the past three decades, Sydney house prices have twice increased by more than 8 per cent over a quarter, the first time in June 2015. This outcome highlights the rarity of such a significant quarterly gain, presenting unique conditions for buyers and sellers. For homeowners, this is the fastest rate of capital growth on record. Although prices are accelerating faster at the upper end followed by the mid-point of the market, the cost of upsizing remains a hurdle. For first-home buyers, low mortgage rates have improved the affordability of repayments, but saving for a deposit is a challenge due to rapidly rising prices, low wages growth and low interest on savings.
There is a clear compositional difference in Sydney’s housing rebound: units continue to underperform compared to houses, although the outlook has improved. Unit prices increased 2.2 per cent over the March quarter to $751,038, a marginal 0.2 per cent higher than the same time last year. This is a turnaround following the weaker performance across the previous three quarters.
Owner-occupiers have been the driving force behind Sydney’s swift price leap thanks to ultra-low home loan rates, government incentives and high household savings. Investors, who have been on the sidelines, have a renewed appetite and this could continue to support a recovery in unit prices. Strong buyer demand for houses means properties are not on the market long, and this has depleted overall supply to a multi-year low. Prospective sellers will be encouraged by record price expectations which will help to appease demand. This rapid quarterly growth isn’t likely to continue. Prices will still grow but it is unlikely to stay at such sustained growth rates over each quarter.