Sydney home prices surge again – here’s what buyers are now paying

Auction clearance rates have hit levels normally seen in markets where demand heavily outweighs supply. Picture: Sam Ruttyn

Sydney home prices have shot up again over the past month in the latest sign that another city property frenzy is brewing.

PropTrack figures released Monday showed the median value of city dwellings, based on sales of units, townhouses and houses, jumped another 0.7 per cent over August – one of the strongest monthly rises in close to a year.

It was the highest rise among the capitals outside of Darwin, with REA Group economist Eleanor Creagh describing it as “a re-accelerating” of growth and a “turnaround” from conditions late last year when the Sydney market was in a minor slump.

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The relentless growth means the average Sydney house is now about $66,000 dearer than it was a year ago, while unit buyers are forking out an extra $24,000 compared to last August. A median house costs $1.58 million, while the median unit price is now $861,000.

These price rises are putting fresh pressure on buyers already battling one of the toughest markets in the country.

The rebound has been fuelled by a perfect storm of three interest rate cuts this year – in February, May and July – which have boosted buyer confidence and encouraged more home seekers who had previously been sitting on the fence to flood back into the market.

This has combined with a shortage of new homes as governments flounder in their bid to meet the ambitious targets of the National Housing Accord.

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REA Group economist Eleanor Creagh said the market was “re-accelerating”.

Mortgage brokers say their phones have been running hot in recent weeks, with a wave of would-be buyers rushing to secure loan pre-approvals ahead of the spring selling season.

“There’s been a noticeable spike,” said Owl Home Loans broker Aidan Hartley. “People see the market heating up and many want to get ahead of that.”

At the coalface, Sydney’s auction scene is already roaring back to life, with clearance rates hovering near the 70-80 per cent mark in recent weeks – levels normally only seen when demand wildly outstrips supply.

The numbers paint a grim picture for hopeful buyers: soaring competition, dwindling choice, and no relief in sight as the city hurtles into another feverish property cycle.

Hotspotting director Terry Ryder said the federal government’s announcement last week that it would expand and fast track the First Home Guarantee Scheme would add “fuel to the fire”.

The scheme allows buyers with deposits of only 5 per cent to buy homes without needing pricey lenders mortgage insurance, with government guaranteeing the loan.

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