Sydney median house prices hit $1 million for first time

Or you could buy 3 houses in Hobart and still have plenty of change

Mike King

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Published July 23, 2015 12:25 pm AEST

Domain's quarterly report shows Sydney's median house price has hit $1,000,616, after soaring 22.9% in the past year.

Real estate advertising group Domain, which is owned by Fairfax Media, says the rise is the fastest since at least the late 1980s, and beats the price boom of the early 2000s.

Existing homeowners may well be jumping for joy – but there are a few provisos they need to remember.

Selling now and trying to find another property in Sydney means you'll also be paying 22.9% more than a year ago. Moving to another state would be a better option where house prices are much cheaper anyway? You could buy 3 houses in Hobart or 2 in Brisbane or Adelaide and still have change left over.

Sydney's annual change is more than double its closest rival, Melbourne, with a gain of 10.3%, while most other capital cities recorded low single-digit gains. Perth, impacted by the tailing off of the mining boom saw median house prices fall 1.4% over the year. It also illustrates that there's no housing bubble in Australia, but – could potentially be one in Sydney.

Domain's senior economist Andrew Wilson says Sydney is now more expensive than London and is catching up to New York and Paris. Dr Wilson points to a chronic lack of housing in Sydney for the problem and has told ABC radio, "I'm not sure that we'll ever catch up – we're so far behind the eight ball at the moment in terms of demand for housing that, even though we are seeing significant levels of new housing coming through, I just don't think we're going to be able to catch up and that will mean always upward pressure on prices."

One issue that needs to be considered is Domain's median value is far higher than other data providers. CoreLogic RPData puts Sydney median house prices at around $900,000 based on data for the June 2015 quarter, while the Australian Bureau of Statistics quoted $786,000 in March 2015 as Sydney's median price. Here's CoreLogic's data.

It may just mean other providers are yet to catch up, or it could point to errors in Domain's data. Either way, $1 million is a lot for a house, but while demand is greater than supply, Sydney house prices could become the most expensive in the world.

Or they could crash back down to earth like they've done before.

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