Sydney's housing market managed to register its first median dwelling-price increase during the June quarter, mainly due to the optimism in the market after the federal election and the recent cash-rate cut.

Figures from the Australian Bureau of Statistics (ABS) show that Sydney's median house price has risen by $5,000 to $870,000 in the June quarter.

However, it seemed that a sustained recovery in the New South Wales capital is still not in the cards given the decline in Sydney's residential index for detached homes. According to ABS, the index has fallen for a sixth consecutive quarter in June.

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The national value of detached dwellings fell by 0.6%, reflecting a more muted decline from the previous quarter's slump of 3.1%. The decline in the prices for apartments, townhouses, and semi-attached dwellings also eased from 3% to 0.8%.

Some economists are tipping a housing market recovery next year, with prices growing by as much as 10%. According to UBS, the sharp lending growth in July, as well as the consistent performance of auction markets, seems to indicate that a recovery is on its way.

CoreLogic research director Tim Lawless said the significant lift in values over the past month is in line with the consistent performance of the auction market.

"It's likely that buyer demand and confidence are responding to the positive effect of a stable federal government, as well lower interest rates, tax cuts and a subtle easing in credit policy," he said.

Furthermore, the likelihood of further rate cuts strengthens the outlook for a price recovery next year.

"If the strong rises in values continue over coming months, we would not be surprised to see a new round of macroprudential policies introduced in order to keep debt levels in check and encourage spending in other areas of the economy," Lawless said.