House prices are continuing to surge with prices up 14.3 per cent in a year as the national market has a rare “synchronised upswing”.

The one thing that could slow the market is affordability constraints and tighter credit policies, according to Corelogic’s monthly home value index.

In May, dwelling values rose 2.2 per cent across capital cities, however, this was slightly weaker than March when prices increased 2.8 per cent, breaking a 32-year record.

Sydney had the strongest price growth at 3 per cent while Perth lagged behind at 1.1 per cent and the Melbourne market held on at 1.8 per cent as the state went into lockdown again.

Corelogic house prices: May

“Such a synchronised upswing is an absolute rarity across Australia’s diverse array of housing markets,” Lawless said.^Source: Corelogic home value index May 2021

Corelogic research director Tim Lawless said of the 334 sub-regions analysed, 97 per cent recorded a lift in the past three months.

“Despite the consistently strong headline results, the underlying trends have shifted during the past year.

“The most expensive end of the market is now driving the highest rate of price appreciation across most of the capital cities, whereas early in the growth cycle it was the most affordable end of the market that was the strongest.

“It was the smaller capital cities that led the housing market out of the Covid-19 slump, but now Sydney has risen through the ranks to record the largest capital gain during the past three months with values up 9.3 per cent.”

However, the increased prices are continuing to put pressure on affordable housing in Sydney with the NSW productivity commission finding a lack of housing was limiting the number of workers available.

Lawless said that for now, Australia remains firmly entrenched in a housing boom and will continue to rise in 2021 but will slowdown as affordability affects market participation.

By RENEE MCKEOWN