Property prices soar in Australia's major cities

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Property prices are continuing to rise with a number of Australian capital cities entering uncharted territory.

There's no sign house prices in Australia's biggest cities are slowing down any time soon, with the median house price in Sydney rising 10 per cent in the past 12 months.

The median price in Australia's biggest city rose to $1.1million, according to Domain, and prices also rose by 10 per cent in Hobart and Melbourne.

Adelaide's median price hit more than $500,000 for the first time ever.

Domain's Chief Economist, Andrew Wilson, said nationally the median house price was now more than $780,000 up 7.7 per cent in the last 12 months.

"One of the key drivers for the Sydney and Melbourne market is strong migration," he said.

"Net migration into New South Wales in the last financial year was over 60,000, and net migration into Victoria over 80,000 last financial year and of course that is a key driver of demand."

A five bedroom home on a 550 square metre block sold in the western Sydney suburb of Rooty Hill - 42 kilometres west of the CBD - sold for $1million a few weeks ago.

Nidus Group real estate agent, Ismail Ates said it was a record price for the area.

"It achieved a million dollars in the first open home, we had 30 people come through the open house and it sold smack bang on that day so it took seven days to sell," he said.

He said soaring prices, were changing the demographics of the community.

"Definitely, we're seeing a big mix of buyers come through, starting to see heaps of the Asian community come through the property, we're also seeing buyers from out of the area," he said.

At $1 million, the Rooty Hill property is just under the new Sydney median house price according to property group Domain.

Domain says prices for units rose 3.4 per cent, but around the country it was a mixed bag.

Values fell last year in Hobart, Brisbane, Perth and Canberra but rose in the other capitals.

Mr Wilson said it was making it harder for those wanting to make the switch away from renting, especially in the larger cities.

"With rents rising now in Melbourne and Sydney faster than incomes, it means that those personal balance sheets of tenants are going to come under real stress," he said.

Dwelling price growth is expected to ease this year. and NAB has revised up its forecast for national house price growth from 0.4 per cent to 3.4 per cent.

Apartment prices, which were expected to fall, are now predicted to rise by nearly 1 per cent.

This slow down should appease the Reserve Bank board, but NAB economist Riki Polygenis says what the RBA will do with official interest rates will depend on the state of the domestic economy.

"And on that front we're still expecting a slowdown of growth into 2018 and we believe the RBA will be forced to cut the cash rate in the second half of 2017 to prevent a rise in unemployment in 2018," she said. 

It comes as Sydney was named as the second most unaffordable housing market in the world - according to the annual Demographia report just behind Hong Kong.

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