The Domain.com.au June House Price Report has today revealed that house prices in Sydney have surged 22.9 per cent over last 12 months — double the national median house price growth of 11.7 per cent — to a million dollar median house price.
In doing so, the harbour city has emerged as a significant player in the international property market. The median house price has now surpassed that of London, is fast approaching New York but remains well behind the property prices of Paris.
The key findings of the quarterly Domain.com.au House Price Report show:
- Sydney market reports remarkable growth over June quarter to reach median house price of more than $1 million
- Melbourne market continues strong recent revival
- Brisbane price growth resumes but remains modest
- Perth house prices still falling as confidence wanes
- Canberra market clearly strengthening with buyer activity on the rise
- National median house price is up 4.3 per cent over the quarter and 11.7 per cent year-on-year
Commenting on the report, Domain Senior Economist, Dr Andrew Wilson, said:
“The Sydney housing market has been the standout performer of all the capitals over this quarter, recording a phenomenal 22.9 per cent price growth year-on-year. Other capital cities reported steady growth, with the Perth and Darwin property markets the only ones to see a drop in median house price value over the quarter. Nationally, the median house price jumped 4.3 per cent over the quarter – and increase of 11.7 per cent over the year.
“Sydney’s strong growth is expected to continue for the foreseeable future, while solid buyer activity and interest is expected to continue to drive steady growth in the Melbourne and Canberra markets.”
Sydney’s remarkable June quarter performance was unsurprisingly ahead of all the other capitals, with the median house price increasing by an astonishing 8.4 per cent to $1,000,616, according to Domain data. Sydney unit prices also surged over the quarter by 6.6 per cent to $656,078 — again the strongest local growth rate of the modern era.
“Sydney’s median house price has increased by 22.9 per cent over the 2014-15 financial year which is one of the highest annual growth rates ever recorded by the city. It’s a result that is now exceeding the boom time results of 2001 and 2002,” Dr Andrew Wilson said.
“The main catalyst has been low mortgage rates — the lowest since the mid 1960s. It’s a perfect storm of local supply and demand factors generating the price growth. A strong local economy, coupled with high levels of migration and a chronic undersupply of housing and record levels of investor activity have also been a significant contributor.”
“Confidence and momentum will continue to sustain the Sydney market through the remainder of 2015, although growth rates are unlikely to match the record-breaking June quarter performance,” Dr Wilson said.
The Melbourne housing market continued its strong revival over the June quarter recording an increase of 3.5 per cent in the median house price to set a new record at $668,030. Melbourne’s median unit price also increased strongly by 3.2 per cent over the quarter, also to a new record $443,549.
The median house price in Melbourne increased by 10.3 per cent over the 2014-15 financial year with the median unit price up by 4.5 per cent over the same period.
“The strong prices growth in the Melbourne market over the last 12 months has been generated primarily by aspirational buyers, particularly in Melbourne’s eastern suburban regions. Rising buyer activity in suburbs west and north of the city also contributed to the house price growth,” Dr Wilson said.
“We are yet to see the impact of recent record levels of inner city apartment construction, however, a number of factors including an improving local economy, falling unemployment, low interest rates, rising confidence, a surging population and increased investor activity have been key ingredients in the Melbourne market’s upswing this year.”
The Brisbane housing market, while positive, continued to produce results slightly below the predicted price growth for 2015. The median house price increased by just 0.6 per cent over the June quarter to $490,855 with unit prices up by 1.0 per cent to $371,508. House prices in Brisbane have increased marginally by 1.9 per cent over the past year, while unit prices have fallen by 3.2 per cent.
“Underperformance by the local economy and fragile buyer sentiment continues to impede buyer activity and prices growth in Brisbane. Buyer activity in the inner and middle zones of city remain solid, while the budget markets to the west and north of the city are showing early signs of a sustained revival,” said Dr Wilson.
“Significant recent inner-city apartment construction will likely continue to push supply well ahead of demand in this market sector and impede prices growth”
The Domain.com.au report reveals a modest increase in the Adelaide housing market – with a slight increase in the median house price over the June quarter. After a strong result over the March quarter, median house prices increased by just 0.2 per cent to $479,285, while Adelaide unit prices fell by 2.7 per cent over the quarter to $292,399.
The median house price for Adelaide has increased by 3.3 per cent over the 2014-15 financial year, with the median unit price up by just 0.6 per cent over the same period.
“The prospects of a solid recovery in buyer activity for the Adelaide market have lessened with recent results indicating a generally fragile buyer sentiment. A sustained improvement to the local economy would be the key to driving house prices — in particular a fall in the high levels of unemployment,” Dr Wilson said.
“Adelaide remains the most affordable mainland capital city with relatively high yields and low vacancy rates likely to attract increasing numbers of investors. The outlook for the market remains mixed for the remainder of 2015, though prices growth for the year is likely to match last year’s result.”
The Perth median house price fell by 0.9 per cent over the June quarter to $605,089, while Perth unit prices have dropped 2.1 per cent to $405,417. Over the last 12 months, Perth’s median house price has fallen by 1.4 per cent, while unit prices are down by 2.1 per cent.
“Modest buyer activity and weakening house price growth can be expected for the remainder of 2015. The market is reflective of the weakening local economy over the past year, with the resource sector declining and unemployment rising sharply,” Dr Wilson said.
“The key to restored confidence in the Perth housing market is an improved economic performance, early signs of which are now emerging.”
Median house prices in Hobart were steady over the June quarter, after a drop in the March 2015 quarter. Hobart’s median house price remained at $325,972, an increase of just 0.6 per cent over the last financial year. Hobart unit prices also recorded a flat result over the June quarter with a median of $272,932, down by 1.6 per cent over the year.
“The underperforming local economy continues to hinder a sustained revival in buyer activity and prices growth in the Hobart housing market. Increased investor activity and higher numbers of first home buyers are set to support the market over the remainder of 2015, though median house price growth is likely to be moderate at best,” Dr Wilson said.
The Canberra housing market showed strong growth in buyer activity over the June quarter, continuing the significant momentum the city experienced over the last 12 months. The Canberra median house price increased by 1.5 per cent over the quarter to $616,313. This was an increase of 5.4 per cent over the 2014-15 financial year which was second only behind Sydney and Melbourne for annual prices growth.
“Canberra has now recorded three consecutive quarters of house price growth for the first time since 2009. However while house prices are performing well, unit prices did fall sharply over the quarter down by 6.3 per cent to $382,350, down by 6.8 per cent year-on-year,” Dr Wilson said.
“Restored confidence in the local housing market is likely to result in increased buyer activity over the remainder of 2015. Recent high levels of apartment construction however, continue to push supply ahead of demand with downward pressure on prices growth.”
Darwin house prices rebounded sharply over the June quarter, following a flat result over the previous March quarter. The Darwin median house price increased by 1.6 per cent over the June quarter to $654,270.
Although this was an increase of 1.8 per cent over the 2014-15 financial year, Darwin’s median house price still remains below the peak $680,337 recorded over the December quarter 2013.
“Reduced activity in the resources sector over the past year has impacted housing market activity. Rising unemployment and affordability barriers have also constrained buyer activity and prices growth. The local market however, is showing early signs of a rebound with prices growth likely to continue over the remainder of 2015,” Dr Wilson said.
“The unit market is subdued, highlighting that the high levels of inner city apartment development are pushing supply ahead of demand. Unit prices fell by 3.4 per cent over the June quarter to $471,789 but were up by 3.3 per cent over the year ending June.”