Sydney’s median house price hit an astonishing $1,123,991 in December, according to the Domain Group’s rental and house price report. The Harbour City’s median house price is so steep, it’s now $300,000 higher than Melbourne’s, the second highest-priced capital city in Australia.

The strongest quarterly result over 2016 was December, with prices up 4.7% in the three months, and up 10.7% over 2016.

This was a sharp contrast to December 2015, when prices fell 3% to $1,011,283.

“It was a strong finish to the year, with momentum from interest rate cuts in May and August and a resurgence of investor activity being felt,” said Dr. Andrew Wilson, chief economist of the Domain Group.

Sydney’s apartment prices also recorded strong results, up 2.9% over the December quarter to $711,256, and up 6.3% over 2016.

“The prospects are for growth again this year, but we’ll unlikely get these high figures again with no changes likely to interest rates,” Wilson said.

Paul Bloxham, chief economist at HSBC, said that growth in 2016 was slower than 2015’s, and there are widespread signs that house price growth is starting to ease.

“We are expecting it to slow further into 2017 and there are other factors at work. We don’t think the RBA will cut interest rates any further and global interest rates have risen,” he said.

“Add to that, prudential authorities will continue to maintain tight settings.”

Bloxham projects 4% to 6% growth for the housing market over the year, with some weaknesses in the apartment sector, but no declines.

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