Sydney's median asking price for detached houses topped $1 million this week for the first time as sellers raised expectations in a booming market.
The median asking price rose $10,600 over the past seven days, according to Sydney-based data company SQM Research Pty. That's the highest since the firm began reporting the data in April 2009.
Across Australian state and territory capitals, the median asking price for detached homes jumped $6,400 over the week to $755,100, the figures show.
Record-low central bank interest rates are fuelling a surge in demand from investors, which has regulators concerned that speculative buying is creating an unbalanced housing market.
SQM forecasts values in the nation's most populous city could rise as much as 12 per cent in 2015.
"Right now it would be impossible to purchase a free standing house in Sydney's inner ring for under $1 million," SQM Managing Director Louis Christopher said. "I don't see any change in the immediate future. It's going to remain a pretty strong sellers' market."
Sydney asking prices soared 23 per cent for houses and 21 per cent for apartments over the past three years. Across the country's major cities, they've climbed 12 per cent for houses and 13 per cent for apartments in the period. Canberra was the worst performer, with asking prices plunging 12 per cent for houses and 13 per cent for apartments.
Slowing growth
Sydney house prices rose 14 per cent in October from a year earlier, according to the RP Data CoreLogic Home Value Index. The pace of growth is slowing: the 4.5 per cent gain in the three months through October compared with 5.8 per cent a year earlier.
"Price growth has moderated in the last few months," said David Cannington, senior property analyst at Australia & New Zealand Banking Group Ltd. "The Reserve Bank is talking about increasing interest rates, so that will add some downward pressure on price growth."
Cannington forecasts a 5 per cent increase in Sydney dwelling prices in 2015. ANZ Bank forecasts a rate increase in mid-2015, he said.
The housing market has been underpinned by the Reserve Bank of Australia keeping its benchmark interest rate at a record-low 2.5 per cent for 15 months. Investors now account for more than half of all new home loans.
The RBA has indicated that regulators plan measures to target speculation by people buying residential property as investments.
Bloomberg
