Sydney house prices soar by $121k amid controversial first-home buyer scheme

Auction activity has been strong and prices have been rising. Picture: David Crosling

Sydney home prices have lurched higher again — sending homeowner wealth soaring while aspiring buyers have been left scrambling to simply get a foot on the bottom rung of the ladder.

New PropTrack figures revealed city house prices have grown $121,500 over the past year, while unit prices are $52,500 more expensive.

These rises followed a 0.4 per cent average rise in Sydney prices over November, which pushed up total annual growth to 7 per cent.

A typical city house now costs about $1.62m, up from just over $1.5m at this time last year, while the median unit price is $883,000, a rise from $830,500 a year ago.

Prices at this level cemented Sydney as by far the country’s most expensive housing market and reignited fears the city is descending into another affordability crisis.

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Many homes have been smashing reserve prices at auction. Picture: Daily Telegraph / Monique Harmer

Sydney houses were an average of nearly $500,000 pricier than in Brisbane, the second most expensive capital, and about $600,000 higher than in similarly sized Melbourne.

PropTrack chalked recent price rises to a cocktail of interest rate cuts, expanded first-home buyer incentives and renewed demand from investors, who had largely sat on the sidelines over 2024.

This demand coincided with a lacklustre spring selling season – listing volumes have risen over recent months, but not by enough to meet the rise in demand.

REA Group economist Eleanor Creagh said the October expansion of the First Home Guarantee Scheme, which helps eligible buyers purchase with deposits of only 5 per cent, was pushing up prices.

“We have already seen an uplift in search activity from first-home buyers on realestate.com.au and I think we will continue to see increased activity from first-time buyers,” she said.

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REA Group economist Eleanor Creagh said investor activity was rising too. Picture, John Gass

“We know the expanded home guarantee scheme will allow many to purchase sooner than they otherwise would have, and it is likely to stimulate demand from first-home buyers.

“It is probably one of the factors bolstering home buying demand at the moment, alongside investor activity, upgrade activity, a series of interest rate cuts, a boost in sentiment and population inflows.”

Michael Garofolo, director of auction group Cooley, said the market was particularly strong for properties under $1.5m as that was the cap for the government First Home Guarantee Scheme.

“Once you get passed $1.5m, it becomes a different market,” he said.

Agents explained that the market was actually only at “medium heat” but it was so expensive to start with that even modest rises in prices added tens of thousands of dollars.

Avenue Auctions director Andrew Cooley said the market was “strong” but “not yet booming”.

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