House prices in Sydney reached a record high at the end of 2020, but the harbour city’s units have lost the most value of all capital cities, according to a new report.

Key points:

  • Sydney’s unit prices were $20,000 less than when the pandemic began
  • However Sydney’s house prices were $13,000 above 2017’s peak
  • Regional NSW’s property prices surged amid the uptake of remote working conditions

The median house price in Sydney in the December quarter was $1.21 million after a jump of nearly 5 per cent, the Domain report said.

That is about $13,000 above the previous peak in mid-2017.

But the gap between houses and units in Sydney continued to widen, the report showed.

The value of units in Sydney fell about $20,000 from pre-pandemic levels — the biggest loss across all capital cities.

Domain senior research analyst Nicola Powell said the housing market had “defied the odds”, with pessimistic forecasts made early last year failing to come to fruition.

The COVID-19 pandemic had changed lifestyle preferences, she added, with regional NSW outperforming Sydney.

“I think with the ability to work remotely, we have seen it drive demand to outer suburban locations but also regional areas as well,” Dr Powell said.

Dr Powell says the pandemic has created a surge in demand for property in regional areas of NSW.(Linkedin)

Significant government support measures, a “remarkable rebound” in consumer confidence, mortgage holidays and a reduction in property market activity during the lockdown period influenced last year.

“All those things together did help to support prices, but that dip in price we recorded mid-year was short lived for houses,” she said.

SQM research managing director Louis Christopher said Domain’s numbers were a little stronger than other data providers, but there was no doubt it was a strong quarter.

Prices in Sydney and Melbourne increased by about 2 or 3 per cent on SQM figures, he said.

But SQM had recorded dwelling price rises in excess of 8 per cent for the quarter in regional NSW and Queensland.

Mr Christopher agreed working-from-home arrangements partially explained why houses outperformed units, with people seeking space and privacy.

He said a housing crash was averted in 2020, largely thanks to government grants.

“We had high unemployment, we had a recession, we had the closure of the international border — all of those things would normally spell disaster for the housing market,” he said.

Nationally, house prices in all capitals except for Darwin and Perth hit a record high, according to Domain’s data.

Earlier this month, CoreLogic placed December’s median house price in Sydney at $1.01 million, while the median unit price was $733,852.