Sydney median house prices have hit $1m for the first time, according to the latest Domain Group House Price report.
The report revealed median house prices in Sydney are $1,000,616, rising 22.9% in just 12 months.
The report touted it as Sydney delivering the “unthinkable” and having “emerged as a significant player in the international property market” but there are concerns about the pressure being put on a worsening housing affordability crisis.
The CEO of St Vincent de Paul society, John Falzon, said the $1m mark was a clear signal of housing market that rewards some while excluding many.
“For those who are on the remote fringes of the housing market struggling to find affordable rental accommodation, especially if they are low income struggling household, let alone the chances of someone finding accommodation to purchase, this signals an experience of further exclusion and really points to the desperate need for government to do what markets cannot,” he said.
Falzon called on the federal government to “have the courage” to review some of the tax mechanisms that drive up prices in the housing market such as negative gearing and capital gains tax exemptions.
“The government also needs to make a radical investment in social housing across the nation to make sure people are not threatened with likelihood of homelessness,” he said.
“The federal government needs to take leadership in this area and not walk away from housing and homelessness as issues of national import. We need a national plant to make sure that no one in Australia is denied a very fundamental and simple right, to a place to call home.”
Domain senior economist Andrew Wilson said it was a boom that was exceeding 2001 and 2002 when house prices increased by 22.8% in a year. The fastest rate of growth in the early 2000’s was 6.7% over the June quarter of 2002. Sydney house prices increased by 8.4% in the last quarter.
Wilson said it was a range of factors that had driven the prices, including the high rate of investors.
“The main catalyst has been low mortgage rates, the lowest since the mid 1960s. It’s a perfect storm of local supply and demand factors generating the price growth. A strong local economy, coupled with high levels of migration and a chronic undersupply of housing and record levels of investor activity have also been a significant contributor,” he said.
“Confidence and momentum will continue to sustain the Sydney market through the remainder of 2015, although growth rates are unlikely to match the record-breaking June quarter performance.”
Mission Australia’s CEO, Catherine Yeomans, said surging house prices were sending people into crisis accommodation for months instead of weeks and pushing them to the fringes of society.
“By any measure that price is quite extraordinary, skyrocketing house prices have impacts all the way down the line,” she said.
“What we know where is people are struggling to find accommodation close to family support networks and more importantly lose to employment opportunities. They are further and further pushed out to areas where there is no public transport or might be commuting for hours.
“It ss getting harder and harder and is pushing people further afield.”
Mission Australia has been calling for a housing summit for months to be chaired by the federal government, preferably the treasurer, Joe Hockey. Yeomans said it was not just the very poor who were adversely affected by high house prices.
“We think it’s an issue for all of a society. People are looking at house prices and have a good job, sustainable employment, can access a home loan, but what’s the size of prices doing for their ability to purchase?” she said.
Yeomans said there was not one simplistic solution but the federal government need to take a leadership role on the issue and involve all three levels of government.
The Domain report also found increases in houses prices in Melbourne, Brisbane, Adelaide and Canberra while prices in Perth fell.
Melbourne had the next largest increase after Sydney, of 10.6% in the past year to a median of $668,030. Brisbane increased by 1.9% to $490,855. Adelaide increased by 3.3% to $479,285, Canberra increased by 5.4% to $616,313 and Darwin increased by 1.8% to $654,270.
Perth media house prices fell by 1.4% to $605,089.
The increase in house prices comes after a Domain report found earlier in the month that a surge in investors was pushing up the prices of rents in almost all of Australian capital cities.
Concerns about a rental affordability crisis have grown as the housing market shows no sign of abating.