Australian home price rises accelerate sharply over the month of May

The pace of growth accelerated sharply over the month of May with the median dwelling price, which includes both houses and apartments, now sitting at $715,000.

Sydney led the charge in price rises, with prices going up by 1.8 per cent over May setting the median dwelling price at $1.052 million.

Its the only capital city where the home price is over a million dollars and has now tallied up growth of 4.5 per cent of the last three months according to the CoreLogic Home Value Index.

"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."

Housing in regional Australia also saw one of its biggest jumps over the past months rising by 0.5 per cent with the median home value across regional Australia now sitting at $715,092.

But the rate of growth in home prices in regional Australia has been more subdued than cities.

"Over the past three months, growth in the combined capitals index was more than triple the pace of growth seen across the combined regionals at 2.8 per cent and 0.8 per cent respectively," Mr Lawless said.

Less homes coming onto the market has been seen to be a key cause of why prices are on the rise again.

The number of homes advertised for sale fell further in May in both capital cities and regional Australia.

In regional Australia the number of homes advertised for sale is 18 per cent lower than the previous five year average.

"At the national level, we have seen an average of 35,143 new listings added to the market over the past three months," Mr Lawless said.

"Over the same time, we have seen an average of 39,760 dwelling sales.

"This disconnect between available supply and housing demand is a central factor placing renewed upwards pressure on housing values," Mr Lawless said.

Meanwhile Melbourne saw its median dwelling price rise by a smaller 0.9 per cent with the median home costing $755,871 in May.

"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.

He also pointed 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."

Mr Lawless said that across the country price rises for home had been significant.

"Nationally after about half a per cent increase over March and April, we've now seen the national index increase by 1.2 per cent - so that's a real acceleration in the pace of capital gains," he said.

However all eyes are now on the RBA's monthly interest rate announcement next Tuesday.

"A further rate hike by the RBA would quell some of the exuberance in the market," Mr Lawless said.