Sydney's Median House Price Soars to Record $1.6 Million, Putting Homeownership Out of Reach for Many

Sydney's median house price has reached an all-time high of $1.6 million, according to Domain's House Price Report for the March 2024 quarter. This represents a staggering 2.1% quarterly increase and an 11.1% annual rise, further exacerbating the city's housing affordability crisis.

Dr. Nicola Powell, Domain's Chief of Research and Economics, suggests it's "absolutely possible" for Sydney's median house price to approach $2 million within the next three years, which would require a 22.9% increase. The surging prices are attributed to a combination of factors, including a chronic shortage of new homes, strong population growth, high construction costs, and a tight rental market, all of which are fueling housing demand.

Despite the new record, house price growth momentum has slowed compared to the previous quarter. However, prices are still expected to continue rising, with the lack of supply across Australia putting ongoing pressure on pricing. The price gap between Sydney's housing types remains significant, with houses now costing twice as much as units. The median unit price in Sydney currently stands at $806,137, up 1.9% quarterly and 6.1% annually.

Why this matters: The soaring house prices in Sydney are making homeownership increasingly unattainable for a large portion of the population. This growing affordability crisis has far-reaching implications for social equality, intergenerational wealth disparity, and the overall well-being of the city's residents.

The housing affordability challenge is not limited to Sydney, with the combined capitals' median house and unit prices also hitting record highs. Much of the nation's house price growth is being driven by cities like Perth, Brisbane, Adelaide, and Sydney. Brisbane and Adelaide's median house prices have surged past $900,000 and are on track to reach the $1 million mark by the end of 2024.

Darcy Modina, a Brisbane engineer, feels fortunate to have purchased her home in May 2022, believing she would not have been able to afford the same property today. Her story highlights the rapidly deteriorating affordability for aspiring homeowners in many Australian cities.

As Dr. Powell notes, "The challenging rental conditions are also expected to push some prospective first-time buyers to fast-track their journey toward homeownership, particularly in more affordable markets like Perth, Brisbane, and Adelaide, as well as for units in higher-priced markets like Sydney." However, with prices continuing to outpace wage growth, the dream of homeownership remains out of reach for many Australians, particularly in Sydney where saving for a deposit can now take over 15 years.

Key Takeaways

• Sydney's median house price reached a record $1.6M, up 2.1% quarterly and 11.1% annually.
• Median house price could reach $2M in 3 years, driven by supply shortage, population growth, and costs.
• House price growth has slowed but is still expected to rise, with a significant gap between houses and units.
• Housing affordability crisis extends beyond Sydney, with other major cities also seeing record-high prices.
• Homeownership is increasingly unattainable, with saving for a deposit taking over 15 years in Sydney.