THE value of an average Sydney house has broken through the $600,000 barrier for the first time. Six years after first reaching the half-a-million-dollar mark, Sydney’s median house price hit $610,500 in September.

Property data company Residex said the median price rose $11,000 in the month driven by first-home buyers, low interest rates, an improving economy and a shortage of new homes.

The increase means tougher times ahead for new-home buyers but is good news for established property owners who are seeing values climb.

“The rise is a triple whammy for first-home buyers as prices as well as interest rates are going up and the first-home buyers’ grant is being scaled back,” Residex head of research John Lindeman said.

“The good news, though, is for people who bought houses five years ago or more as they would be seeing significant increases in property values, giving them greater equity and the ability to upgrade into more expensive homes.”

The median home price is the middle point for sales and smooths out distortions caused by a few unusually high or low prices.

In 2003, it hit $500,000 before dipping back for a few months and then began to rise, Residex figures show. It has never since been beneath that level, rising to $570,000 in 2004 and retreating to $528,000 in 2006 as interest rates started to rise.

By September, 2007 the median price was once more on the way up reaching $571,000, and property values have been creeping up ever since.

“People have held on to their jobs – and all the worst-case scenarios in relation to the jobs market haven’t been realised,” CommSec chief economist Craig James said.

In coming months, first-home buyers would not be as prevalent because of the winding back of government grants, he said.

But Mr James said the impact would not be large as first-home buyers made up only about 25 per cent of purchasers.

“As long as people do their sums and realise interest rates are going higher, they shouldn’t have any fears about the Sydney housing market,” he said.

“House prices tend to rise about 8 per cent a year … and I’m looking at a very normal scenario over the next 12 months.”

Experts said prices would rise as construction of new homes was failing to keep up with population growth.
New dwellings have fallen from 173,000 nationally in 2002 to 124,000 this year.

Source: Daily Telegraph