Sydney’s median asking price for a free-standing house has risen above the million-dollar mark, with one research company claiming negotiations for such homes begin at $1,005,800.
Louis Christopher from SQM Research said the issue is being replicated in Melbourne and to a lesser degree Brisbane. However, it's not yet reminiscent of the widening gap between the house to income ratio of 2003.
Mr Christopher said there is a lot of development stock being readied for sale in inner-city locations, with first home buyers choosing to buy apartments in the middle to outer central business district ‘ring’.
“Sydney has always been expensive but is it expensive now when compared with historical income standards? I don’t think so, we are not at that point yet, not exactly,” Mr Christopher said.
“We went through an extended period for around eight years where the market underperformed, and I recognise this recent recovery may be a catch-up.
“I often look at Sydney like a volatile stock as it is going places, has a strong outlook for the future, a track record of earnings growth, big infrastructure plans and it seems the population just increased by about 90,000 people.“
Mr Christopher said developers in the inner-city CBD ring are busily preparing “serious shoe box” development stock and wonders where the value is found in such investment.
“Some of the unit sizes are down to 35 square meters and the smaller the unit size the greater the price of square meter rises,” he said.
According to the RP Data CoreLogic Home Value Index, Sydney, Melbourne, Brisbane and Adelaide were the only capital cities to record an increase in values over the three months to October 2014.
RP Data’s head of research, Tim Lawless, said home values across the combined capital cities have increased by 8.9 per cent over the 12 months ending October 2014, which has slowed from a peak of 11.5 per cent in April this year.
“Sydney continues as a standout with home values increasing at a rate of more than one per cent per month, up 3.9 per cent over the past three months,” Mr Lawless said.