Home buyers are in for a tough time as record low interest rates continue to drive capital city property values higher.
Capital city dwelling values were up 1.6 per cent in July, following a 1.9 per cent rise in June, according to the RP Data-Rismark Home Value Index.
Dwelling values in Sydney rose two per cent last month and 6.5 per cent in the past 12 months.
In Perth, prices rose 1.6 per cent in July and 8.3 per cent in the past 12 months, and a widely expected rate cut at next week's Reserve Bank meeting means the price acceleration likely won't be slowing anytime soon.
RP Data research director Tim Lawless said the rising prices would see the issue of housing affordability back in the headlines.
"With the housing market once again showing solid capital gains and rents also rising, the issue of housing affordability is likely to begin attracting more attention," Mr Lawless said.
"The recent housing market correction which bottomed in May 2012, where values were down 7.4 per cent from peak to trough across the combined capital cities, together with mortgage rates moving to historically low levels, delivered substantial affordability improvements for Australian housing.
"However, with Sydney, Perth and Canberra values now back at record high levels and some other capital cities not far off their previous peaks, there are likely to be a growing number of households who find it challenging to enter the housing market."
Mr Lawless said a typical capital city property was selling in 45 days, compared with 59 days at the same time last year.
He said vendors were now discounting less while clearance rates in Sydney remained close to 80 per cent.
But while prices were booming in Sydney, Melbourne, Perth and Canberra, conditions were more sedate in Brisbane, Darwin, Hobart and Adelaide, he said.
Meanwhile, new home sales in June increased 3.4 per cent, seasonally adjusted, the fourth consecutive rise, according to the Housing Industry Association (HIA) new home sales report.
HIA chief economist Harley Dale said momentum was building after a weaker year overall for new home sales.
"New home sales volumes are 27 per cent down on their long-term average," Dr Dale said.
"There is still a long way to go."
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