Sydney median house price reaches A$1m mark

Sydney house prices have soared out of reach of many young Australians

Sydney property prices have continued to soar, reaching the A$1m mark ($736,000, £471,000), according to new research.

Domain property group said the median price in greater Sydney had risen 8.4% over the June quarter and 22.9% year-on-year.

It was the fastest annual pace of gain since the late 1980s, and was stronger than price booms in the early-2000s.

Record-low mortgage rates and demand from investors have fuelled the growth.

The report comes amid fears that many people living in Sydney and Melbourne will never be able to afford their own home.

The increase in the median house price in Sydney between July 2014 and June this year was double the national average of 11.7%, the report said.

"It's a perfect storm of local supply and demand factors generating the price growth," Domain economist Andrew Wilson said in a statement.

"A strong local economy, coupled with high levels of migration and a chronic undersupply of housing and record levels of investor activity have also been a significant contributor," Mr Wilson said.

The report also found that average house prices in London were now below the median price in Sydney. Median prices for London houses were not available.

Meanwhile, the median Sydney house price was catching up to global real estate hot spots such as New York and Paris, Mr Wilson said.

Government concern

High demand coupled with low interest rates have led to concern that property bubbles are forming in Sydney and Melbourne.

Australian Treasurer Joe Hockey said the Federal government was willing to work with the New South Wales state government to address what he described as a housing "supply logjam".

"The demand is extraordinary for Sydney so the response has to be to increase the supply of housing," Mr Hockey told reporters on Thursday.

He said building approvals had increased recently and housing construction was strong "but clearly it is not meeting demand".

The Domain report said the median house price in Melbourne - the next most-expensive city - rose 3.5% over the June quarter to A$668,030 ($492,000, £315,000).