Sydney houses are more expensive than ever. The big surprise is the city next in line

High interest rates and inflation have failed to dampen the nation’s property market, with Sydney’s median house price reaching a record high of more than $1.4 million while Brisbane has become the second most expensive capital in the country.

In an indication of the extremely tight market due to near record-low listings of new homes for sale, CoreLogic reported on Monday that capital city dwelling values rose 0.8 per cent in May to be up 8.3 per cent over the year.

There’s yet another median house price record for Sydney - and Brisbane has leapfrogged Melbourne.Credit: Marija Ercegovac

Sydney’s overall dwelling values increased by 0.6 per cent. The median house value climbed $20,000 to a record $1.44 million while unit values lifted 0.7 per cent to a record $848,961.

House values in Sydney have now climbed 8.2 per cent over the past 12 months, more than double the city’s inflation rate. Unit values have increased by 5.4 per cent.

In a sign that Melbourne is becoming more affordable for hard-pressed potential home buyers, the median house value was steady at $937,289 while values of units in the southern capital lifted 0.3 per cent to $614,299.

Melbourne house values are up a modest 1.9 per cent over the past year, meaning that in inflation-adjusted terms the city has become more affordable.

It’s a different story in Brisbane, where the median house value is now $200 above that of Melbourne after climbing another 1.4 per cent through May. Over the past year, values have lifted 16 per cent, second only to Perth, where they soared by 22.2 per cent.

Brisbane’s median unit value climbed 1.9 per cent last month to now sit almost $1200 above Melbourne units.

Across houses and units, Brisbane is now the second most expensive capital behind Sydney after overtaking Canberra in May. But Canberra’s median house price, $961,403, was up 0.5 per cent over the past month.

CoreLogic research director Tim Lawless said extremely low levels of supply were putting the squeeze on prices.

In Perth and Adelaide, the number of listed homes is more than 40 per cent below its five-year average. In Brisbane, listings are 34 per cent below the longer-term average.

“It’s the disconnect between supply and demand that is trumping the downside pressures from interset rates, high inflation and low sentiment,” Lawless said.

“Despite worsening affordability pressures, from both a purchasing and a rental perspective, Australian residents still need to keep a roof over their heads.”

While house prices continue to climb, there are some more positive signs about the rental market, with CoreLogic’s measure of rents up 0.7 per cent in May, the smallest increase this year.

Lawless said there had been a reduction in rental growth relative to the first three months of the year, with the annual pace of rents also starting to ease.

“The trend towards a slowdown in rental growth can probably be attributed to an easing in net migration since the first quarter of 2023, as well as rental affordability pressures forcing a change in rental patterns,” he said.

CoreLogic noted a slowdown in values for the most expensive properties as potential borrowers run into affordability issues.

Data from the Australian Prudential Regulation Authority points to a slowdown in savings and home loans held by the nation’s major banks through May.

Householders’ deposits with banks are still climbing but at a slowing rate.Credit: James Davies

Total household deposits held by the Commonwealth Bank reach $391 billion at the end of May. While up 5.6 per cent over the past year, deposits increased by just 0.2 per cent through the month.

Household deposits held by National Australia Bank actually fell 0.1 per cent in May, although over the past year they were still up by 7.3 per cent.

Among loans to owner-occupiers, Westpac increased its mortgage book by 0.8 per cent in May to almost $311 billion. Over the year, it has increased its mortgages by 7.4 per cent.

Household loans issued by the ANZ have led the big four, up by 8.1 per cent over the year but only 0.4 per cent in May to $198.1 billion.

The nation’s biggest lender, the Commonwealth, increased owner-occupier mortgages by 0.4 per cent in May to $368.1 billion, up just 1.2 per cent over the year.

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