Sydney's median house price back over $1 million as interest rate cut looms

Sydney and Melbourne house prices surged in February with double-digit annual growth putting the capital cities on track to outstrip the peak of the 2017 property boom by the middle of the year.

Sydney house prices increased by 1.8 per cent in February while Melbourne jumped 1.3 per cent, CoreLogic data released on Monday shows. The surge has pushed Sydney's median house price back above $1 million.

The booming price growth may be a complication for the Reserve Bank board ahead of its meeting on Tuesday, with pressure mounting for a rate cut to a record low to help counteract the impact of the coronavirus outbreak on the economy. Markets put the chance of a rate cut on Tuesday at 90 per cent.

House prices climbed 10.9 per cent in Sydney and 10.7 per cent in Melbourne for the 12 months to February, with median values now at $1,001,357 and $809,719 respectively.

Melbourne's housing values surpassed the September 2017 peak in January, with Sydney expected to reach a new record high by May if the growth trend continues. Both cities have now reported their ninth consecutive month of growth.

Brisbane, Canberra, Hobart and Adelaide have also reached record high property values. Brisbane house prices were up 0.6 per cent over the month to $551,766, with units up 0.3 per cent to $384,396.

Sydney unit prices increased 1.5 per cent in February to $763,962, with Melbourne units up 1 per cent to $583,294.

CoreLogic head of research Tim Lawless said housing would be seen as one of the positive aspects of the economy when the RBA meets on Tuesday but would be a small topic of discussion compared to coronavirus.

"Over the weekend things deteriorated very quickly," Mr Lawless said.

"If we don't see a cut [in rates] tomorrow we will almost certainly see one the month following."

The coronavirus outbreak could also be a dampener on the housing market, he said, pointing to the possible damage to consumer confidence and the flow-on effects this can have to different industries.

Sydney has staged the fastest recovery of all the capital cities, but Mr Lawless said the growth was "slowing" with the city hitting an affordability ceiling.

Holiday locations and major regional centres like Geelong and Newcastle posted property price growth, Mr Lawless said, but regional areas hit by drought had not recovered. Outback Queensland house values fell 21 per cent over the year and regional Western Australia was also under pressure.

Overall, regional house prices were up 1.7 per cent over the last 12 months compared to a 7.6 per cent rise in the capital cities.

Rent increased 1.4 per cent nationally following housing finance data with investors taking out loans at near-record lows.