The combined median house price across Australia's capital cities is now a record-breaking high of $1,066,133 according to Domain's latest report.
Not only have house prices reached record highs across Australia, combined capital unit prices have also reached a new high of over $621,000.
Despite this, house prices have still risen three times faster than units over the past year according to Domain's December 2021 Quarterly House Price Report.
When compared to early 2021, growth in both house and unit prices has lost momentum, suggesting the peak pace of growth has passed.
Domain Chief of Research Nicola Powell said house and unit prices are continuing to beat price records due to lockdown activity rebounds, high household savings, and the ongoing demand to buy property.
"Demand continues to outstrip supply across a majority of the cities however rapid price growth and affordability issues are likely to shift demand in 2022," Dr Powell said.
"Price growth has slowed from earlier in 2021 but it is higher than last quarter."
Domain's Chief Revenue Officer John Foong said that there are changing market dynamics afoot.
"As consumers look to more affordable options, we’re seeing increases in keyword searches for 'duplex' 'dual' and 'unit' and believe that although Sydney, Melbourne, Brisbane and Adelaide set new record unit prices, house prices continue to gain the highest yields for investors," Mr Foong said.
Canberra second most expensive city to buy a house
Every capital city excluding Perth and Darwin hit new record highs for house prices in the December quarter.
Sydney remains Australia's most expensive city to buy a house or unit, with record median prices of $1.6 million and $800,000 consecutively.
House prices in Sydney have risen 33.1% from December 2020 to December 2021.
"House prices have grown four times faster than units over the past year, a divergence that has created a record price gap with houses now double the price of a unit," Dr Powell said.
"The rapid escalation in price is proving to be a significant financial barrier to entry for buyers and upgraders against a backdrop of low wage growth.
"Housing affordability will continue to weigh on demand throughout 2022."
Canberra has claimed the second most expensive spot to buy a house with a median house price of $1.178 million, with prices rising by 36.6% over the past year, as well as a near-record unit price of $555,644.
House prices in Canberra have risen 52% since the pandemic began, the biggest price jump recorded across the capital cities, which presents a financial barrier for buyers.
"The disparity between property performance and associated affordability constraints is expected to drive demand to units," Dr Powell said.
"While it is still a competitive market for home hunters, rising supply and easing demand trends should support more realistic seller prices and greater buyer choice."
Australia's third most expensive capital, Melbourne, hit new record-highs with a $1.1 million median house price and $593,387 median unit price.
"Sellers should move into 2022 with some confidence that the pace of price growth will ease, and they will need to have a more realistic view of pricing because buyers now have more choices," Dr Powell said.
Brisbane, Adelaide and Canberra house prices show no signs of slowing down
Brisbane's house prices have risen 10.7% over the last quarter and 25.7% annually - the steepest increase in roughly 18 years - with a median house price of $792,065.
The divergence between house and unit prices are also at an all-time high, with advertised homes for sale at a multi-year low.
"The rapid price escalation will prove to be a financial hurdle for entry buyers," Dr Powell said.
"It will also be challenging to upgrade from a unit to a house, particularly against a backdrop of low wages growth."
Buyers in Adelaide can now expect to pay over $731,000 for a house, as house prices increased at the steepest rate on record at 8.6% quarterly and 27.5% annually.
Unit prices also had the strongest annual gain since 2008, with the median price sitting at $380,349.
"Demand continues to outstrip supply with the overall supply of homes for sale dropping to a multi-year low and forcing house price growth," Dr Powell said.
"Current demographic trends will continue to support housing demand with more people arriving into Greater Adelaide than leaving."
Hobart's house prices have risen 44.9% since the start of the pandemic, the second highest growth rate in Australia, with the current median house price of $752,110.
"With the lowest average wages of all the states we can expect that entry-level buyers who are on a local average wage will find it increasingly difficult to enter the housing market," Dr Powell said.
"Home hunters will find buying conditions to be fierce as the number of homes for sale is well below the five-year average, and while stock is starting to build, it remains tight."
Darwin's median house prices have risen 30.1% over the past 12 months, sitting at $645,487, while the median unit price is currently $326,159.
Perth's median house price is now sitting at $612,348, and its median unit price is $380,353.
"Australian median house price surpasses $1 million" was originally published on Savings.com.au and was republished with permission.