Sydney sees home prices rise by more than 14 per cent as growth exceeds expectations
Australia's largest city sees prices rise faster than domestic rivals, writes Peta Tomlinson
Every Australian state capital city's housing market recorded growth last year, and the standout was Sydney.
Tipped as a market to watch given improving affordability and a shortage of homes, particularly new stock, Australia's largest city out-performed the nation with 14.5 per cent capital growth, streets ahead of second-placed Perth (up 9.9 per cent), and Melbourne (8.5 per cent), according to property information company RP Data.
Nationally last year, residential markets recorded the strongest annual growth since 2009. In Sydney, house prices rose 15.2 per cent, while flat prices gained 11.6 per cent. However, with value growth outstripping rental growth, yields dipped, to 3.9 per cent gross for houses and 4.7 per cent for flats, compared to 4.3 per cent and 5.0 per cent, respectively, a year earlier.
Simon Hemphill of Savills Australia was not surprised by Sydney's result, but says few tipped the extent of the gain. "No one was forecasting 14 per cent. It exceeded all expectations."
Low supply is driving the rises, and demand from Asia remains strong.
"Chinese buyers are still looking to get their money out of Asia, and Australia remains a safe bet," he says. "There is a genuine lack of supply in Sydney, and unabated underlying demand. Once you have scarcity in the market, [stock] flies out the traps."