Construction workers build scaffolding at the site of a new apartment tower in Sydney
Construction workers build scaffolding at the site of a new apartment tower in Sydney November 30, 2012. Reuters/Tim Wimborne

Home prices in the capital cities of Australia have gone up in February 2015, as home values rise by 0.3 percent. Sydney has the highest median price at $680,000 now.

According to the figures of property consultant CoreLogic RPData, home prices today are 8.3 percent higher than last year. Reuters reported that the data showed the price differences in various cities across the country. While Sydney recorded the highest increase in home prices by 1.4 percent, the prices in Brisbane, Hobart and Perth dropped in February.

The surge in the home prices in Sydney could complicate it further for the Reserve Bank of Australia (RBA) that is already under pressure to cut interest rates, to offset low exports. However, economists have warned the RBA that the additional cut in interest rates may risk properties becoming less affordable in the country’s two biggest cities -- Sydney and Melbourne. Several experts believe that cutting interest rates would intensify the “dangerous imbalances” building up in the economy, reports SMH.

Saul Eslake, an Australian economist at the Bank of America Merrill Lynch, said nothing good can come out of a further increase in house prices. He added that there was no economic benefit and no “wealth effect.”

Eslake said that the surge will only impact the society by locking out younger generations from home ownership. He added that the gap between those 'who can' afford a home or those 'who cannot' will widen. Commonwealth Bank of Australia's economist Gareth Aird warned that household budgets looked “stretched” as the ratio between debts to income has hit the new highs.

Meanwhile, Australia’s most valuable property has hit the rental market for $50,000 a month. Rental listing agent Tom Pockley said the price is already a “giveaway.” The Daily Telegraph reported that the seven-bedroom waterfront estate at Point Piper could be Australia’s most expensive house when it was sold. News of its rental offering comes at the same time the house has been placed on the market.

The Elaine home is owned by the Fairfax family and is listed with Ken Jacobs Christies International Real Estate. Previous reports have indicated that the family has received offers of as much as $67 million. Sydney’s most expensive property in nearby Altona in Point Piper but three times smaller than Elaine was sold for $53 million in 2013.

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