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HOUSE prices in Sydney have soared. The market has thrown off the lingering effects of the global financial crisis and recorded its biggest jump since 2003.

Led by price leaps in the city's more expensive suburbs, the median Sydney house price rose 12.1 per cent last year, according to a report from Australian Property Monitors.

The median price is on the brink of $600,000, a figure at odds with dire predictions during the depths of the crisis, and one which may strike fear into the hearts of first-home buyers.

''It's an extraordinary result that shows the recovery in the housing market is complete. We're moving into a new era,'' Property Monitor's chief economist, Matthew Bell, said.

He said the growth was fuelled by a ''surprisingly resilient jobs market'' and strong rises in the sharemarket, which allowed investors and those wanting a better home to think big.

As a result it was Sydney's ritzier suburbs that realised the biggest rises, including Sylvania Waters (up 53.8 per cent), Taren Point (38.4 per cent), Palm Beach (35 per cent) and Malabar (34.4 per cent).

In terms of regions, prices rose most sharply in the city-east (up 18 per cent), but less celebrated areas such as Canterbury-Bankstown (7.8 per cent) and the south (8.9 per cent) also experienced significant gains.

Although Sydney still has the highest median price by a healthy margin, Melbourne is gaining fast. It recorded 18.5 per cent growth, propelling it through the $500,000 threshold for the first time to $517,756.

Sydney's new home buyers now face an even tougher task to climb the ownership mountain.

''It just makes life that much tougher for low- and middle-income earners who don't have a foot on the ladder,'' the executive officer of Shelter NSW, Mary Perkins, said. ''It has a flow-on effect for the private rental market and it becomes a mechanism in our society for dividing people between those who have property and those who don't.

''Home ownership has advantages in terms of investment and tax, and the children of home owners will eventually benefit through inheritance. They will get richer while those outside the market are less and less likely to ever be able to get in.''

A rival property monitor, RP Data, said the figures were inflated, reflecting a change in the types of properties sold rather than the actual price growth.