As a direct result of the strong market conditions currently affecting the Sydney housing market the median house price jumped 4.2% for the September quarter. This now brings the median house price to $722,000. This historical high now sees house prices in unchartered territory, and should the current growth rate continue, there will undoubtedly be a shift in focus towards affordability for the nation’s biggest city.

Units have also experienced very high levels of growth, with values up 3.3% for the quarter according to data providers Australian Property Monitors (APM). The median unit price is now $515,000. With extremely strong buyer activity at present we anticipate that the local market will continue to experience growth into 2014.

The dominant demographics currently contributing to the heated buying environment are upgraders and investors. Attracted by recent increases in yield and price growth many investors are intent to get on the property ladder, especially those keen to utilise their self-managed superannuation funds (SMSF’s). This is helping springboard some upgraders into their next home. While these two groups are fighting it out, first home buyers are conspicuous by their absence from the market. In 2010 approximately 15% of buyers were first home buyers. At present, with the winding back of the first home buyer grants, about 8% of sales are to first home buyers.

There are also signs that the prestige market is beginning to pick up, with several multi-million dollar auction sales in recent weeks; something that has not occurred with any reliability since the onset of the GFC in 2008. This will be increasingly important to monitor especially as the wealth in Sydney’s real estate continues to accumulate. It is estimated that 20% of Sydney’s suburbs now have a median value of over $1,000,000.

 

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