Property prices continue to rally in Sydney, driving home values up sharply in May. According to the CoreLogic May Home Value Index, capital city dwelling prices jumped 1.6 per cent, increasing prices by five per cent year-on-year. Houses gained 1.8 per cent while unit values stalled and rose only 0.1 per cent.

Sydney ended up as the best performing capital, recording a home value growth of 3.1 per cent last month. Canberra, Hobart, and Melbourne also registered gains while Perth remained to be the only capital to record a slide in prices.

When it comes to year-on-year figures, Melbourne emerged on top with gains of 13.9 per cent, followed by Sydney at 13.1 per cent. Both Perth and Darwin had valuation losses of 4.2 and 3.5 per cent, respectively.

This performance suggests renewed strength in the local market, particularly in the housing sector, although this might also point to cooling apartment prices as apartment construction booms.

Rising auction clearance rates also point to strong growth.

“The high rate of auction clearance has demonstrated a remarkable bounce back after tracking below 60 per cent during December with Sydney’s auction market recording a clearance rate as low as 52.9 per cent in December,” said CoreLogic head of research Tim Lawless.

However, Lawless was quick to add that this might be short-lived given tighter lending standards from the banks.

“While the annual pace of growth has clearly reversed direction on the latest few months of data, the trend is still relatively fresh and may be short-lived,” he said.