Sydney has continued to lead the recovery in home prices, but Melbourne's gains are more sustainable according to a new report.
The median dwelling value in May, a figure which includes both houses and apartments, in Sydney was $1.052 million according to the CoreLogic Home Value Index after prices rose 1.8 per cent in the month.
It was the city's highest monthly price rise since September 2021. Since January this year home values have risen by a total of 4.8 per cent, or the equivalent of a $48,390 rise in the median dwelling value.
Meanwhile Melbourne saw its median dwelling price rise by a smaller 0.9 per cent with the median home costing $755,871 in May.
While that may be a more modest rise, it is not all bad news.
"Sydney in technical terms, its gone a bit crazy," said CoreLogic's research director Tim Lawless.
"Since the market bottomed out in January its gone up by nearly 5 per cent - at 4.8 per cent.
"So that's certainly adding to affordability pressures in the market, but it doesn't seem to be really dampening the exuberance we are seeing.
"Sydney of course has a real undersupply of available housing stock."
While at first Melbourne's property price gains may look smaller, the gains are solid.
"This is the third month in a row that we've seen housing values rise in Melbourne, and May's rise a step up from previous months," Mr Lawless said.
"So their is not quite the same level of exuberance as in Sydney where the growth rate is double Melbourne's but that growth rate of 0.9 per cent in Melbourne is much more sustainable than what we are seeing in Sydney.
"Of course Melbourne is not quite as expensive, so it doesn't seem to have the same affordability constraints."
He also highlighted positive signs for housing in Melbourne in the future.
"It also arguably has better demographic fundamentals now that we are starting to see the state migration moving back into positive territory along with booming overseas migration as well."
Despite the recent gains Melbourne home prices are still down by 8.2 percent from a peak in February last year.
It is the most expensive housing that is pushing overall prices up in Sydney.
The most expensive top 25 per cent of houses in Sydney have risen in prices the most - with growth of 5.6 per cent over the past three months.
That compares to more affordable homes in Sydney, where the median has risen by just 2.6 per cent.
However those looking for a prestige home in Sydney are still paying less than when property prices were at their peak.
"Buyers targeting the premium sector of the market are still buying at well below peak prices," Mr Lawless said.
"Although values across more expensive homes are rising more rapidly, at the end of May, dwelling values across Sydney's upper quartile remained -11.8per cent below the January 2022 peak.
"This is the equivalent to a saving of around $213,000 from the cyclical high."
Nationally home prices rose by 1.2 per cent in May and across capital cities the median home prices rose by 1.4 per cent.
