Sydney House Prices Soaring Above the Other States

December 3rd, 2014

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The Australian Bureau of Statistics (ABS) has released recent data showing the comparative pricing of the property market among the states. And the winner for ‘State with the Highest House Prices’ is awarded to… Sydney.

The September quarter usually reveals a trend of increases in house sales, and therefore increases in house pricing, and this year is no different. According to the Sydney Morning Herald, the ABS data revealed that Sydney saw a 2.7% rise for the September quarter in house pricing, compared with only 1% rise in the other capital states such as Melbourne, Adelaide, Hobart and Brisbane. Darwin and Canberra rose by only 0.3% for the same quarter, and Perth prices fell by 0.1%. Sydney’s house price rise is significantly larger than the other states, and has raised some concerns as to how long such a growth can continue.

Overall, house prices have increased in the past 12 months and Sydney’s house prices increased by a significant 14.6%. When you compare this increase against the other states, such as Melbourne which rose by 6.9%, it’s definitely noteworthy. Sydney’s increase is more than double that of Melbourne’s, the next highest growth rate. Such an increase raises questions as to how sustainable these growth rates are for Sydney, and more importantly how much longer people will be able to afford buying property.

The sharp increase can be attributed in large part to the growth in investment properties. While investment can have a positive impact economically on Sydney, it can also impact the family unit striving for a first home in their suburb. Sydney first-home buyers today are generally unable to buy a property in the suburb of preference and have to look elsewhere.

A suburb is not simply about a home but is, for many families, a community or area where they wish to bring up their children. It is a connection to a childhood or family unit. There are schools of preferences, infrastructure, and a community that families wish to be a part. Because of this growth and sharp increase in investment, these suburbs of preference are becoming suburbs that first-home buyers cannot afford.

Will the house pricing continue to soar in Sydney?

Will the other states catch up?

Is the rate of growth sustainable?

These are all questions that only time can answer.

With home loan interest rates still at one of their lowest points ever, the property market is likely to stay as strong as ever for the time being.