Sydney median house price now $1 million


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The double-whammy of the lowest interest rates since the 1960s and an investor frenzy has seen Sydney’s median house price smash through the magic $1 million mark for the first time.

Sydney’s median is now higher than than average house prices in London and is fast approaching New York, the Domain House Price Report, released on Thursday, says.

Domain’s senior economist, Dr Andrew Wilson, says house prices leapt an extraordinary 8.4 per cent over the June quarter to $1,000,616.

“It’s the highest rate of growth since the late 1980s,” Dr Wilson said.

“And it’s because of low interest rates and they’re going lower, lower and lower.”

The median house price has increased by almost $200,000 in a year or 22.9 per cent, which is one of the highest annual growth rates ever recorded by the city. Dr Wilson said it exceeded the boom time results of 2001 and 2002.

He attributed the huge growth to the high level of investor activity, with the $6.4 billion in loans approved over May – a record. “Sixty-two per cent of the housing market loan share is now investors – another record – and an increase of 27 per cent over the first five months of this year compared with the first five months of last year.”

Auctioneer Will Hampson has presided at auctions going $200,000, $300,000 and even $500,000 over reserve this year with suburb records often being smashed.

But even he described the $1 million median house price and the rate of growth as “incredible”.

“Each year for the past three years the auction market has been so strong,” Mr Hampson said.

He says auction listings are up 50 per cent up on last year for August and he’s also tipping a strong spring.

“Conditions are perfect because interest rates are at record lows and there’s a shortage of supply in many pockets,” Mr Hampson said.

“A lot of buyers want to buy in a particular suburb – so perhaps Balmain, Mosman or Double Bay … if they want to buy in those suburbs they are going to have to pay the price.”

The rate of growth is sure to spark fresh suggestions that the market is overheating but Mr Hampson hosed down such talk. “The market is not going to collapse … even if it does adjust slightly, there’s a massive amount of both local and foreign investment.”

AMP Capital chief economist Shane Oliver says the $1 million median house price is a milestone that will reinforce perceptions that Sydney is beyond reach for many homebuyers.

“It highlights how expensive Sydney property has become,” Dr Oliver says.

“One million dollars ain’t what it used to be 20 or 30 years ago, but for an average wage earner it’s a hell of a lot of money.

“Certainly interest rates are low and people can get into the market – or some can – but for ordinary workers $1 million is a bit too far, so they’re forced into the rental or the lower quality end of the property market.”

Leading inner west agent Peter Gordon of Cobden & Hayson​ says $1 million is now the starting price rather than the median in his area.

“We recently sold a little tiny house in Balmain – basically one bedroom and a study – for $1.05 million,” he said.

Mr Gordon said there had been a spike in market appraisals recently.

“A lot of sellers … are starting to think we are at the end of a cycle and thinking they should be selling to take advantage of the current strength just in case there is any sort of downturn,” he said.

“They’re bringing forward their plans with a strong market expected in the next couple of months, but beyond that it’s perhaps a bit less certain.”

However, McGrath chief executive John McGrath said Sydney had proven itself to be one of the most resilient property markets in the world, with long-term fundamentals underpinning the market.

“The boom will end at some point, but that doesn’t mean price growth will end, but rather continue in a more moderate fashion,” Mr McGrath said.

Methodology: The stratified median house price – or middle price – is the preferred measure used by Domain Group and the Australian Bureau of Statistics. House sales over a specific period are stratified – divided into price groups – to generate multiple medians, which are then used to generate a Sydney-wide median.

Online Source

The Indian Telegraph Sydney Australia

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