PHOTO: Sydney house prices surged by more than 33 per cent in 2021, on Domain data. CREDIT:MICHEL BUNN
Sydney house prices have hit a record median of $1.6 million, new figures show, after climbing almost $1100 a day in 2021.
Greater Sydney house prices skyrocketed by 33.1 per cent – almost $400,000 – last year, climbing 6 per cent in the final quarter alone to a median of $1,601,467, Domain’s Quarterly House Price Report reveals.
It’s the steepest annual increase since Domain records began in 1993, with house prices in half a dozen regions rising more than $500,000.
Unit price growth was more subdued but still rose 8.3 per cent annually – and a marginal 0.9 per cent last quarter – to a record high of $802,255.
Domain’s chief of research and economics Dr Nicola Powell said house prices had grown roughly four times faster than unit prices over the year, creating a record gap between the two – with houses now twice the price of units.
“The rapid escalation in price is proving to be a significant financial barrier to entry for buyers and upgraders against a backdrop of low wage growth,” Dr Powell said.
Commonwealth Bank Head of Australian economics Gareth Aird said Sydney’s phenomenal price growth, particularly for houses, not only highlighted the impact of incredibly low interest rates but were also due to the pandemic.
The price disparity between houses and units showed the premium people were now prepared to pay for more space, and also reflected the increase in demand for outer suburbs and regions, where units were fewer, he noted.
“As much as interest rates have had a massive impact on property prices, I think it’s COVID-related issues, particularly the changing work from home environment and people spending more time at home, that has put a premium on houses,” Mr Aird said.
Price growth would be more subdued in 2022, he predicted, having previously forecast another 7 per cent growth, with prices to peak in the second half of the year.
However, with Mr Aird and other economists now expecting the Reserve Bank to hike interest rates in August, due to strong inflation, a lower unemployment rate and signs of wage growth, the market was probably getting towards its top now, as a rate hike would impact how much buyers were willing and able to borrow. The rise in fixed interest rates, already underway, would also impact the flow of credit and weigh on prices, he added.
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