Sydney house prices surge 30 per cent in a year with typical Australian house at $1million

Sydney house prices have surged by $957 a day to a very unaffordable $1.5million – with monthly mortgage repayments approaching $5,000.

A typical home with a backyard in an Australian capital city now costs $1million, with three capital cities having mid-point prices in the seven figures.

Real estate sales group Domain has revealed the true extent of the national housing affordability crisis as record-low interest rates spur a Covid property boom.

The ability of more people to be able to work from home has also seen house prices surge at triple the pace of apartments, with unit values even shrinking in some cities.

In the year to September, Sydney’s median house prices soared by a ridiculous 30.4 per cent to $1.499million.

That means monthly repayments of $5,000 a month on a 30-year loan, even with a 20 per cent deposit factored in, if the mortgage rate has a three in front of it.

Even if a borrower, paying off principal and interest, fixed their loan for three years at a lower Commonwealth Bank rate of 2.29 per cent, they would still be owing $4,600 a month. 

Sydney house prices are surging by $957 a day while a typical home with a backyard in an Australian capital city now costs $1million

The $349,298 annual rise in Sydney house prices from $1.150million equated to a daily increase of $957.

The affordability crisis wasn’t confined to Sydney with capital city house prices climbing by a record 21.9 per cent to $994,579.

Sydney, Melbourne and Canberra now have mid-point house prices in the seven figures. 

But in another twist, Canberra has overtaken Melbourne to be Australia’s second most expensive capital city house market. 

The Domain sales figures were taken before the Australian Prudential Regulation Authority, the banking regulator, announced in early October that lenders would be required to model a potential borrower’s ability to cope with a three percentage point increase in mortgage rates.

With the banks still offering fixed mortgage rates of 2 per cent, Domain chief of research Dr Nicola Powell said buyers feared missing out.

‘Customers are borrowing more to keep up with rising prices and further driving house price growth,’ she said.

Brisbane's median house price rose 15.3 per cent to $702,455 (pictured is a house on the market at Eatons Hill)

Brisbane’s median house price rose 15.3 per cent to $702,455 (pictured is a house on the market at Eatons Hill)

Australian house price increases

SYDNEY: Up 30.4 per cent to $1,499,126

MELBOURNE: Up 16.8 per cent to $1,037,923 

BRISBANE: Up 15.3 per cent to $702,455

ADELAIDE: Up 20.1 per cent to $667,888

CANBERRA: Up 32.4 per cent to $1,074,187

PERTH: Up 9.8 per cent to $598,601

HOBART: Up 31.9 per cent to $698,612

DARWIN: Up 33.2 per cent to $640,068

Source: Domain data on median house prices in the year to September 2021 

But Dr Powell anticipated a slowdown in the strong growth as new lending rules came into effect from next week.

‘This may start to slow down as new serviceability measures are implemented from 1 November,’ she said. 

Sydney wasn’t even the market with the steepest price rises with Canberra’s median house price increasing by 32.4 per cent to $1.074million.

The national capital has now overtaken Melbourne to be Australia’s second most expensive house market. 

As Melbourne endured its sixth lockdown since the start of the Covid pandemic, mid-point prices increased by a more subdued annual pace of 16.8 per cent to $1.038million.

By comparison, Hobart house prices rose by 31.9 per cent to $698,212 while Darwin’s equivalent value for a home with a backyard increased by 33.2 per cent to $640,068.

Perth was the only capital city market where prices didn’t increase in the double-digits on an annual basis, but only just, with median values rising 9.8 per cent to $598,601. 

Brisbane’s median house price rose 15.3 per cent to $702,455 as Adelaide house values went up by 20.1 per cent to $667,888.

Australia is now a tale of two property markets with house prices soaring as apartment values grow at a slower pace or even go backwards as owner-occupiers instead of investors dominate real estate.

A lack of international students, as a result of the Covid border closure since March 2020, has also reduced rental demand in inner-city areas.

Canberra, despite being a very strong house market, was Australia’s worst apartment market with median unit prices in the year to September falling by 2.6 per cent to $489,710. 

In Brisbane, where there are oversupply issues near the city, apartment prices shrunk by 1.8 per cent over the year to $396,609. 

At the other extreme, Hobart apartment values rocketed 23.8 per cent annually to $532,284 as Darwin unit prices increased 22.1 per cent to $359,903. 

Sydney was reflective of the broader national trend where house prices increased at triple the annual pace of apartments.

In Australia’s biggest city, unit values rose by 9.5 per cent to $802,475.

Melbourne’s mid-point apartment price rose by 6.1 per cent to $576,879.

This was slightly weaker than the capital city increase of 6.8 per cent taking the median price to $609,642.