SYDNEY homeowners wanting to get rich were dealt a blow last year with six successive rate rises flattening out property values.
Exclusive figures obtained by The Sunday Telegraph reveal Sydney home values failed to rise as high last year as in previous years. The rate hikes since November, 2009 were blamed for the result with median house prices increasing by just 6.51 per cent last year - almost half as much as the previous year, Residex figures show.
The worst-performing houses were in the western suburbs mortgage belt, where the rate hikes had a major impact.
Units fared marginally better with the median price rising 9.42 per cent in 2010 compared to 10.40 per cent a 0.9 per cent decline in the rate of growth.
Sydney's wealthier areas were also not spared with suburbs experiencing negligible growth, or price falls, as the interest rate hikes hit and savvy buyers looked for better opportunities elsewhere, Residex managing director John Edwards said.
"Suburbs such as Rushcutters Bay, Elizabeth Bay and Balmain are traditionally dominated by owner-occupiers and the high prices have clearly placed constraints on how much people can or will pay," he said.
"Today's buyers are thinking very hard about where to buy, the area's prospects and potential for future growth. For the price you pay for units in some of these areas you can buy houses in other suburbs, and that makes them less attractive."
Unit prices were supported by a strong investor market with cashed-up landlords paying premium prices for city apartments The best-performing suburbs were dominated by areas which offered proximity to the city, good transport and lifestyle. Topping the list were Naremburn, Ashbury, Campsie and Kensington, which rose 20-22 per cent.
Finance worker Greg Dick, his wife Pong Pon and their seven-month-old twins Natalie and Thomas are typical of the buyers choosing to live in Kensington and pushing up prices as a result.
They family paid a record price of $1.948 million in October for a four-bedroom plus study home in the Raleigh Park Development through Wayne Marks of LJ Hooker Kingsford.
"I basically chose Kensington because we ideally wanted to live in the eastern suburbs and the suburbs directly east and northeast are expensive for what you get," Mr Dick said.
"The area's built out now but there's a lot of renovation going on and we believe still a lot of opportunity for capital growth."
Landlords enjoyed significant rent increases in many suburbs as low affordability keeps many in the rental market. Median rents across the city's units rose by 7.1 per cent or $30 to $450, and by 7.4 per cent or about $30 to $510 a week. The median value for a Sydney unit is $477,500.
