THE Sydney property market is creeping out of the doldrums, buoyed by two interest rate cuts and predictions of more to come.

House prices below $1 million, where most property hunters are searching, have bounced back from the previous year, with Sydney’s median house price rebounding to $620,000 from $582,000 a year ago.

RP Data figures show units, which are catching up to freestanding houses in value and popularity, have hit a median of $477,500, up from $465,000 last year.

While Real Estate Institute of NSW figures last week showed the median house price had slumped to $560,000 in the 12 months to March, an autumn rush helped push the figure through the $600,000 barrier, according to RP Data.

“The market isn’t flat, it’s segmented,” McGrath real estate head John McGrath said.

“The Sydney market has been reasonably good over the last year and properties under $1 million did not drop in value that much at all.”

The good news was Sydney had stopped going backwards month by month, RP Data director of research Tim Lawless said. But anyone looking for quick gains in under three years was not going to find them. “We’re past that phase,” he said.

Biggest gains in property values would be reaped in the inner city as research showed increasing demand from not only young people but families wanting to live closer to the city and sacrificing houses for units in order to do so, Mr Lawless said.

Rate cuts would see dips and troughs in house prices start to disappear in spring as the market evens out, said Rod Cornish, head of real estate strategy at Macquarie Group.

“Particularly with two more rate cuts forecast later this year, Sydney home prices will start stabilising then and early into next year,” he said. “Rate cuts do not have a sudden impact and typically it takes six to eight months before their real effect is seen.”

The cuts, which have placed the average standard variable rate at 6.38 per cent – a two-year low – would also see moderate growth in prices next year, Mr Cornish said.

“The median price in Sydney is currently only 12 per cent above where it was in March 2004 so it’s been very subdued for a little more than eight years, during which time prices have been rising 1.7 per cent per annum,” he said.

The Central Coast rebounded the most strongly over the last year as buyers headed north to escape city prices.

Gosford, as well as surrounding water and oceanside pockets such as Macmasters Beach, Blue Bay and Point Frederick, all performed strongly with house and unit prices recording between 15 and 25 per cent increases, RP Data figures show.

Point Clare, an affordable enclave by the water just outside of Gosford saw unit prices jump almost 20 per cent.

Suburbs dominated by or created through new housing estates also surged to the top of the list with houses in the south western developments of Oran Park jumping 30 per cent in value and 11 per cent in Macquarie Links. In the purpose-built community at Breakfast Point prices jumped 12 per cent.

New homes cost less than $500,000 in Oran Park and average between $600,000 and $700,000 in Macquarie Links.

But the established suburbs of the far west and inner west seem to have done their dash. Whereas these regions dominated areas with the greatest price hikes last year, only a few made it into this year’s top 20.

“Every dog has its day,” Douglas Driscoll, chief executive of western Sydney’s largest real estate agency chain Starr Partners, said.

“It’s been quite good value in the west and we’ve seen people in their droves plus a lot of migrants and investors.

“But it has slowed down as prices have crept up and dare I say that that window of affordability is almost shut.”

Sales were strongest now in areas closest to the major centres such as Blacktown, Penrith, Parramatta and Campbelltown, he said, as opposed to their surrounding suburbs which had already been targeted.

“Merrylands, despite bikie wars and shootings, is also still incredibly popular,” Mr Driscoll said. “The suburb has had some quite disastrous PR over the past month and it doesn’t seem to have made any difference to the sales.”