Dwelling approvals rose 2.2% in September and a record 229,438 new homes were approved in the past year, says the ABS.


According to Knight Frank’s Prime Global Cities Index, the weak Australian dollar, an undersupply of new homes and a strong local economy are behind Sydney’s accelerating values, and to an extent Melbourne’s as well.


The index shows in the year to September, Sydney recorded an increase of 13.7%, while Melbourne sits in fifth place with an annual increase of 9.4%.


Regional NSW home prices are also up 8% over the year – the fastest pace of price growth in 5½ years.


Michelle Ciesielski, director of residential research, Australia at Knight Frank said the weak Australian dollar has influenced both expats and foreign investors to buy in Sydney and Melbourne.