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Surging prices challenges 'myth' of oversupply

Demand for new apartments near the city centre of Sydney has not been dampened by record building, according to newly published data. 

According to the latest Domain House Price Report, prices are surging as much as 30 per cent in some suburbs, which could be putting paid to the notion that oversupply represents a major hinderance to the industry. 

Unit prices in the city and eastern suburbs increased by 2.4 per cent in the 12 months to June - the strongest annual result for any region. 

However, suburbs like Chippendale, Redfern, Rose Bay, Ultimo and Wolloomooloo saw significant growth of up to 30 per cent. 

It was suggested that performance was so strong in these areas because of the fact that there are comparatively few sellers in the market compared to buyers. 

This was found to be particularly the case in Darlinghurst - a top performer among all the regions and suburbs. 

Median apartment prices here jumped by 29.4 per cent to an average of $960,000. Indeed, in December 2014, the one-bedroom 1404/227 Victoria Street in Darlinghurst sold for $1.8 million. It could be converted back into a two-bedroom home and offer harbour views.

Since then, the property has been sold again for $2.4 million - and offers for the site came in fast. 

While the list of suburbs where apartment prices were skyrocketing over the past 12 months were largely found in the city and eastern suburbs, the areas that topped them all were those with northern beaches postcodes.

The median unit price in Manly is up 29.3 per cent to $1,318,500 over the year. Sellers are few and far between here - and there are just 15 apartments on the market. 

High costs and lack of new homes to purchase is driving many of the occupants to renovate instead of relocating.

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