IN PHOTO: Advertising signs are seen near a high rise apartment building site in central Melbourne March 1, 2011. Australia's central bank on Tuesday kept its main cash rate steady at 4.75 percent, a widely expected decision as a cautious consumer helped keep inflation restrained even as the country enjoyed a massive trade and mining boom. REUTERS/Mick Tsikas

On Wednesday, much to one’s amazement, Sydney median house prices touched AU$1.36 million for the first time, reported the Domain Group. The median house prices have surpassed the average house prices in London while New York remains next on the list.

The house price project report released by the Domain group, marked that prices improved 22.9 percent amounting to AU$1357549.86 over a year making it highly significant in the international market. However, affordability in Sydney raised tensions.

John Falzon, the chief executive of the St Vincent de Paul society while appreciating the “unthinkable” news said that it would be harsh on those residing in Sydney with lower household income. As has been in the past, lower income groups have always struggled hard to find affordable properties on rent and now that prices have gone higher, it would result in further exclusions, he said.

He urged the federal government to introduce measures which would review the tax mechanisms such as negative gearing and capital gains tax exemptions as it could be one of the reasons behind such soaring housing prices. In addition, he said the government should invest in social housing across the nation to remove the burden of homelessness from people’s shoulders and should make sure that they don’t deny people the right to live.

According to Sydney Morning Herald, home units increased 6.6 percent in the quarter to AU$ 886663.79. Back in January, Andrew Wilson, Domain’s senior economist confirmed that the property boom would exceed the prices touched during 2001 and 2002.

He said that the increasing number of investors have contributed to the price rise. However, he felt that the main push came from the low mortgage rates, which remained lowest since the last quarter of 1960s. “A strong local economy, coupled with high levels of migration and a chronic undersupply of housing” has been some of the other factors for such skyrocketing prices, he argued.

The Guardian reported that Catherine Yeomans, Mission Australia’s chief executive, expressed her concerns over the surging prices, which she believes would leave people in deep crisis for a very long period of time. The impacts would surely go “down the line,” she added.

Meanwhile, the Domain report also found house prices pacing up high in Melbourne, Adelaide, Canberra and Brisbane whereas only Perth witnessed a drop.

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