Homeowners now $70k richer as prices hit new high

Sydney home prices have bounced back from last year’s barrage of interest rate hikes and homeowners now have plenty more equity in their properties to work with.

Sydney home price rises have accelerated this year and are now an average of more than $70,000 higher than they were at this time last year.

PropTrack figures showed the market has fully bounced back from last year’s barrage of interest rate hikes, with prices hitting a new peak in February after inching up 0.55 per cent for the month.

There was similar growth over January and prices have grown a full 1 per cent over 2024.

PropTrack economist Eleanor Creagh said expectations of an interest-rate cut later this year were encouraging more home seekers to make a move.

“More homes have hit the market this year, but demand has kept up with that increase,” she said.

Registrations of home auctions have been rising. Picture by Max Mason-Hubers

“The expectation that interest rates will fall in the second half of 2024 is likely providing a positive tailwind for activity.”

Record population growth was also putting pressure on the rental market, providing an incentive for tenants with a ready deposit to become first homebuyers, Mr Creagh added.

Second home buyers were also active in the market, with many using considerable equity gains in their properties over recent years to fund the costs of a new, more expensive purchase.

It was unlikely new home construction would be enough to mitigate these price pressures, Ms Creagh said.

“Looking ahead, the positive tailwinds for housing demand and a slowdown in the completion of new homes are likely to offset the impact of reduced affordability and a slowing economy. As a result, prices are expected to lift further in the months ahead,” she said.

Unit prices grew faster than house prices over February, with experts pointing to the greater affordability as a factor boosting apartment demand.

Unit prices grew an average of 0.97 per cent for the month, while house prices grew by 0.43 per cent. The median unit price is now $793,000 and the median house price is $1.34m.

With inflation starting to slow, many housing experts claim interest rate cuts that would fuel further property demand remain a strong possibility.

Real Estate Institute of Australia president Leanne Pilkington said the downward trend of inflation suggested the Reserve Bank was unlikely to raise rates again and a cut was more likely.

“The pointers are that the RBA should keep the lid on further rate rises at its meeting in three weeks’ time and that home buyers can anticipate a rate reduction later this year,” Ms Pilkington said.

Rising rents have encouraged more tenants to become first-home buyers.

Ray White chief economist Nerida Conisbee said a bigger cut in rates could push national home prices up by as much as 15 per cent annually.

She added that prices were already rising, partly due to underbuilding, and falling interest rates “will just accelerate” the rate of price increases.

Originally published as Homeowners now $70k richer as prices hit new high