The recent rise in dwelling values after a two-year downturn is sending home prices to new highs again, widening the gap between luxury and average markets, according to a CoreLogic study.
In fact, values are now up by 4.7% since finding a floor in June, with Sydney and Melbourne being head and shoulders above the rest in terms of price growth.
The two cities have witnessed values recover by more than 8% since bottoming out in May, and this growth is faster than anticipated, said CoreLogic head of research Tim Lawless.
"Housing affordability is once again worsening, and the value gap between the capital cities is widening as Sydney and Melbourne values appreciate faster relative to the other capitals," he said.
The difference between the housing values in the two largest capitals and those in others has, in fact, widened significantly over the past decade.
For instance, while Sydney has been the most expensive housing market, there was a short period in 2006 when Perth overtook it due to the mining boom.
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However, Sydney's current median value at $956,249 is 111% more expensive than Perth's $453,393. Ten years ago, the gap between the two cities was just $53,962.
Sydney's gap with Melbourne has also widened since 2009, from 11% to 24%.
"With strong growth across Melbourne over recent years, the city has consistently been the second most expensive property market for some time now, however, this was not the case 10 years ago when both Canberra and Darwin had a higher median house value," Lawless said.
The unit market tells a similar story. Sydney and Melbourne's median unit values are higher than the national average.
Lawless said if this growth continues, more buyers are going to see other cities as more attractive. However, he said there is one important thing other cities should have in order to gain the interest of would-be buyers.
"A key ingredient still missing from capitals outside of Sydney and Melbourne is jobs. An affordable entry point to the housing market is less meaningful when job opportunities are scarce," Lawless said.
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