Nick Viner from Buyer’s Domain said a fast-growing population, limited land supply and record-low interest rates are pushing values higher and will underpin the market in coming years.
“Unlike many parts of the western world, Sydney’s population is rising quickly,” he said.
The NSW government recently forecast that Sydney’s population will increase 31 per cent by 2031.
Mr Viner said the city’s unique geography has also driven prices higher, with available land limited by the ocean, the harbour and the Blue Mountains.
The supply of new homes has also lagged behind other states since the GFC, he added.
Mr Viner said the western suburbs are being particularly influenced by the rise of Parramatta as a second CBD, with more government agencies and businesses moving to the region.
“The ‘Parramatta factor’ is unquestionably behind the record house prices now being achieved in the area,” he said.
Mr Viner said although price growth may ease from the 17 per cent recorded in 2013/2014, the Sydney market is unlikely to face a downturn while all those conditions remain in play.