National property prices up 4.1 percent in the December quarter 2016: ABS
Among the capital cities, Melbourne posted the largest through-the-year growth at 10.8 percent, with Sydney close behind at 10.3 percent.
House prices in both cities experienced strong growth in the December quarter, with house prices climbing 6.1 percent in Sydney and 6 percent in Melbourne.
The mean price of dwellings in Australia is $656,800.
The numbers immediately added fuel to the housing affordability debate.
Research by Ben Phillips, an associate professor of economics and public policy at the Australian National University, showed that while Sydney house prices have jumped 70 percent in the last five years, the average income growth has increased just 13 percent. His analysis was carried in the Huffington Post.
"This result comes at the same time that Australia is in a home construction super cycle, building more homes than ever before. The house price growth is largely related to investor activity in Sydney and Melbourne,” Phillips was cited as saying by the Huffington Post.
“Low interest rates and tax incentives such as negative gearing and capital gains tax discounts are likely adding extra fuel to price growth."
Treasurer Scott Morrison had earlier said there would be a housing affordability package in the May budget and NSW Premier Gladys Berejiklian has already said one of her main goals is housing affordability.
The mean price of residential dwellings in NSW ($864,900) remains the highest in the country followed by Victoria ($690,100).
Perth continued to show weakness, with prices of attached dwellings falling 1.7 percent, followed by Brisbane (1.3 percent) and Darwin (2.5 percent), while prices rose in all other capital cities. The ABS defines attached dwellings that includes flats, units and apartments plus semi-detached, row and terrace houses.
The total value of Australia's 9.8 million residential dwellings increased $274.2 billion to $6.4 trillion. The mean price of dwellings in Australia is now $656,800.