'Real estate stratosphere': Sydney property prices soar
A shortage of new houses, generous tax breaks, cheap credit and "hot" money from overseas have sent Sydney house prices sky high, and few expect the bubble to burst.
"I just need a roof over my head - preferably one I own," says Alastair Wilson, a new father, who echoes many in Sydney's notoriously fevered real estate market.
"I was used to astounding prices in London. However, Sydney prices made my jaw drop."
Emigrating from the UK in 2008, with a six-figure deposit from the sale of his apartment there, Mr Wilson hoped to buy a large family home.
"Now prices have soared so much I'm looking at hovels a very long commute from work," he told the BBC.
Australia has the third highest house price-to-income ratio in the world, according to the IMF. Only Belgium and Canada are more expensive.
But in recent months, as calm has returned to property markets in other Australian cities, Sydney prices have shot through the real estate stratosphere. At over A$1m (US$760,200, £504,000), the median price tag for a detached house in Australia's biggest city is now 13 times the average wage, according to independent property researcher SQM Research.
Sydney house values have risen by nearly 60% since 2009, says Tim Lawless, who works at another property research group, RP Data.
"Sydney has shown the best gains of any capital city in Australia ... Very low interest rates have given prices a huge boost."
The lack of new housing stock in Australia's biggest and most economically attractive city is a key issue. Complex planning laws, local government red tape and state government taxes are also fuelling higher house prices.
The buying heat was turned to high in mid-March, when an unrenovated house squeezed between a petrol station and a block of units in the harbour suburb of Gladesville sold at auction for a staggering A$2.85m, more than A$1m over the reserve price.
It's a common story, with each weekend delivering fevered bidding across the city.
And it is prices like these that make home ownership look like a distant dream for many, even well-paid professionals such as Mr Wilson who has been forced to look in Sydney's outer suburbs.
But even places like Kellyville - 41km north-west of the city - are seeing extraordinary price rises, in some cases 40% in two years.
On the flipside, some canny home owners are grouping together and selling their land jointly to maximise the price. Other owners take a do-it-yourself approach, taking advantage of a relaxation of rules that once forbade so-called granny flats - small, freestanding buildings at the back of residential homes - being built. In the Hills Shire district, for example, granny flat approvals have risen 75% in the past three years.
Then there are Australia's generous tax breaks. Domestic investors, particularly older Australians managing their own pension funds, are eyeing the profits to be made from housing. Under Australia's negative gearing arrangements, investors receive tax breaks for losses they make on investment properties and more than one million Australians have taken advantage of it.
"Investors are piling in for capital gains and huge tax benefits," says Mr Lawless. "It makes great sense for middle-income earners.
Investors now represent nearly half of all new mortgages, he says.
Sydney is part of a club of international cities that attract foreign property investment, particularly in premium properties around the city's harbour. Recently, Chinese investors have been singled out for criticism, with Chinese buyers seeming to dominate auction sales in some parts of the city. But there are no clear figures about exactly how much money is coming from offshore.
Regardless, the federal government has started charging foreign investors upfront fees if they invest in residential housing.
So is the only way up for Sydney prices?
HSBC economists Paul Bloxham and Daniel Smith have published research warning the bubble could burst if Australia's currently very low rates start to rise.
However, many experts, like St George Bank senior economist Janu Chan, disagree.
"I think calling it a bubble is out of line," says Ms Chan. "By some valuations prices are very high, but for many years we didn't see enough construction and there is pent up demand."
"Some buyers may be over-exposed if the Reserve Bank of Australia does raise rates but we expect rates to rise slowly, allowing an exit for those who need to, before rates bite," Ms Chan says.
That is poor consolation for Alastair Wilson however.
"I need a house for my family now. I've even considered moving to Canberra and buying there because house prices in the capital are so much lower.
"But that's not the Australia I dreamed of when I emigrated. Sydney is, and I still love the city. It's such a shame I can't afford to buy here."