Sydney’s property market was the strongest, helping to deliver the strongest year of national capital city prices since 2009. House values rose by 14.5 per cent in Sydney in 2013, pushing the city’s median dwelling price to $655,250, according to the RP Data-Rismark December Home Value Index.
Perth was the second best performer, with an annual growth rate of 9.9 per cent.
Home prices in both cities are currently at record highs, up 10.9 per cent and 3.6 per cent, respectively, over prior peaks. Across the country, capital city home values rose by 9.8 per cent in 2013.
Hobart had the weakest growth, with prices rising by just 2.2 per cent, taking the median dwelling price there to $330,000 – the most affordable of all the capital cities.
RP Data senior research analyst Cameron Kusher said low interest rates increased demand for housing.
“Despite the strongest annual value growth since 2009, the rate of growth was not that startling given the low interest rate environment and the previous successive years in which home values fell,” Mr Kusher said.
Home values fell 3.8 per cent in 2011, and a further 0.4 per cent in 2012, Mr Kusher said.
He said the main challenges for 2014 would likely be the impact of forecast unemployment growth, affordability constraints, and whether regulatory changes will be implemented to cool the near-record high levels of investor activity.