ANZ deputy chief executive Graham Hodges says the rapid rise in Sydney house prices followed a long period of flat prices from 2000 to 2010.

He says price movements tend to go in waves and agreed Sydney is now an expensive city to buy a house in. “We wouldn’t say it’s a bubble,” he said.

“Housing price rises, especially in Sydney and Melbourne where foreign investment in residential real estate is greatest, are attributable to a combination of factors: underlying demand for housing, positive market sentiment, and the construction industry responding to these conditions.

“Outside Sydney and Melbourne, housing sales, prices and construction are more subdued.”