Rate cut pushes Sydney home prices to record high
In the wake of new buyer confidence following February’s rate cut, Sydney’s home prices have hit a new record high.
Sydney home prices have hit a new record high in the wake of improved buyer confidence following February’s interest rate cut and the hope of more to come.
PropTrack’s Home Price Index released Tuesday, revealed Sydney’s median dwelling price reached a new peak of $1.104m in March.
Sydney home prices jumped an average of 0.47 per cent over the month, with the Reserve Bank’s decision to cut the cash rate by 0.25 per cent seen as contributing to the rise.
Home prices had been falling at the end of 2024, but spiked 0.7 per cent over February, when the RBA cut for the first time in years.
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Sydney’s home prices are now sitting 2.85 per cent higher year-on-year.
REA Group senior economist Eleanor Creagh said the February rate cut was the biggest catalyst for the “robust” monthly price growth.
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“Sydney is one of the markets seeing the strongest turnaround in the quarterly pace of home price growth,” she said.
The boost to borrowing capacities and buyer confidence reignited demand in the market, she added.
“(In Sydney) we really saw momentum slow down in the second half of 2024 … the rebound we are seeing now follows that earlier price weakness and that February rate cut has really improved borrowing capacity and sentiment,” she said.
Regions that experienced the highest monthly growth across Greater Sydney were Blacktown (1.01 per cent), The Eastern Suburbs (0.76 per cent) and The Central Coast (0.73 per cent).
As Sydney is the most expensive capital city market, it tends to have a high reliance and sensitivity to interest rate decisions, Ms Creagh noted.
“The high rate environment in 2024 likely saw some buyers delaying their purchasing decision and they’re likely re-entering the market now,” she said.
“Beyond interest rates there are more structural factors including population growth remains elevated, although it is beginning to moderate, and we do continue to see a shortage in the completion of new homes.”
House and unit markets had grown at a similar rate over the year, due to affordability constraints pushing more buyers towards apartments.
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“Over the past five years, house prices have significantly out performed units, although the past couple of years the pace of growth between the two property types has been pretty comparable, likely with buyers being pushed down the value chain.”
Prices in regional NSW had outperformed Sydney prices over the past year, growing by 3.28 per cent year-on-year.
“Comparative affordability continued to support the pace of house price growth in regional areas. However, with interest rates falling in February we are seeing capital cities lead the price growth rebound.”
Ms Creagh expected that the cash rate would be held at the Reserve Bank meeting on Tuesday with a more likely drop in May.
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“Expectations around interest rates also play a role in home price growth, so most people are expecting rates to fall throughout the year so that will play into current market conditions,” she said.
“We expect prices to keep lifting over the coming months, but the rate of growth is likely to be more modest compared to recent years with affordability still a major constraint.”
prestige end of the market.
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| Greater Sydney region | Monthly growth in % | Quarterly growth in % | Yearly growth in % |
| Central Coast | 0.73% | 1.90% | 2.66% |
| Baulkham Hills and Hawkesbury | 0.10% | 1.36% | 2.13% |
| Blacktown | 1.01% | 0.62% | 2.30% |
| City and Inner South | 0.66% | 2.45% | 2.12% |
| Eastern Suburbs | 0.76% | 1.12% | 3.02% |
| Inner South West | 0.26% | 1.96% | 3.59% |
| Inner West | 0.49% | 2.36% | 1.74% |
| North Sydney and Hornsby | 0.74% | 1.98% | 1.81% |
| Northern Beaches | 0.22% | 0.67% | 1.06% |
| Outer South West | 0.33% | 1.41% | 4.94% |
| Outer West and Blue Mountains | 0.18% | 0.83% | 5.34% |
| Parramatta | 0.32% | 1.12% | 4.19% |
| Ryde | 0.59% | 1.39% | 3.26% |
| South West | 0.05% | 0.31% | 4.68% |
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Originally published as Rate cut pushes Sydney home prices to record high