News

January 29, 2020

Sydney House Prices Record Largest Annual Gain since 2017 Peak

Sydney’s property market is well and truly on its way back up, with the latest data revealing house prices grew in every single region of Sydney during 2019.

The market recorded its first annual gain since the boom ended in 2017, continuing its extraordinary recovery which experts say could break price records by the middle of this year.

The latest Domain House Price Report, released on Thursday, showed the city’s median house price regained another $73,000 – an increase of 6.8 per cent – in the 12 months ending December 2019, reaching a new median of $1,142,212.

At the same time, unit median prices reached $735,387, a 3 per cent – or $21,197 – increase. It was also the first annual jump since the market peaked in late 2017.

House prices grew in every region of Sydney: the inner west recorded the strongest annual rise, up 15.4 per cent – adding $225,000 to its median house price, now $1.69 million.

It was followed by the north-west and the lower north shore, with jumps of 13.6 per cent and 13 per cent respectively, adding $160,000 and $300,000 to their medians.

Median house prices on the lower north shore and the northern beaches reached new highs of $2.6 million and $1.855 million.

Domain’s senior research analyst Dr Nicola Powell said Sydney also recorded the most robust quarterly rebound since June 2015 for both houses and units.

“We’re seeing growth over the quarter that was reminiscent of the boom,” Dr Powell said. “If we see the pace of growth continue, it’s likely [records] will be set in the next quarter.”

Houses had regained almost two-thirds of the value lost during the 18-month downturn in only two quarters, Dr Powell said. Units had recovered half of the value lost.

As a result, house prices were now only 4.6 per cent below the mid-2017-high and unit prices 6.2 per cent lower, she said.

The rapid recovery encouraged vendors Jane Johnson and Brian Murphy to put their Newtown investment property on the market.

“We thought it was a good time to ride that wave,” Ms Johnson said. “The market turning was an impetus [for selling].”

She added that they decided to list the unique, conservation award-winning cottage on the market as early as possible this year to stand out and avoid competition.

“Hearing the inner-west figures were tracking well … between that and less competition for a unique property it might get a bit more noticed when there are a load more places in the market,” she said.

BresicWhitney selling agent Renae Dickey said the combination of strong demand and low stock was driving the strong growth in house prices in Sydney’s inner west.

“If we put something online, we’d have 30 or so groups through straight away … buyers were acting with significant urgency [last year],” Ms Dickey said.

She said until enough property came onto the market to supply buyers’ demand, then competition and price growth would continue.

“There’s always going to be a ceiling of affordability for particular homes … if people can afford to step back and wait then sometimes people do step back.”

The unit market revealed a more spotty picture with lower rates of growth and declines in some regions.

Units in the lower north shore and the northern beaches reached new highs of $971,000 and $940,000 respectively, rising 7.3 per cent and 7.1 per cent year-on-year.

Meanwhile, units in the inner west rose 0.7 per cent to $765,000, and units in the south declined 2.1 per cent to $690,000.

EY chief economist Jo Masters said while demand across Sydney was more common, the number of units in each region varied.

“The supply element is vastly different … that’s what’s providing you with those [price growth differences]. A lot of the construction boom was around units,” Ms Masters said.

She said price growth would continue into the first quarter of 2020 despite the chance of affordability concerns coming back into play.

“There is consensus among economists that the RBA will cut rates again … we’ve seen the housing market clearly respond [to previous cuts and] that might be another push in the first quarter.”

Dr Powell said while several factors could temper that growth throughout the year, the downturn was clearly over.

“It’s the first annual growth in two years; it signals that this downturn has reached the bottom.

“It’s still harder to get a mortgage than during the boom, the RBA has less fuel in terms of future cuts and as new listings rise that should help hold back the pace of growth,” Dr Powell said.

Regulators would also step in sooner, placing additional restrictions if prices were to start to run away again, according to Dr Powell.