Sydney property prices have hit a new record, with the median house price in Sydney in the December quarter sitting at $1.21 million.

Sydney house prices jumped nearly 5 per cent in the December 2020 quarter, a Domain report said.

The market in Sydney previously peaked back in 2017 before cooling off.

That is about $13,000 above the previous peak at the time.

Domain senior research analyst Nicola Powell said the housing market had “defied the odds”, with pessimistic forecasts made early last year failing to come to fruition.

The COVID-19 pandemic had changed lifestyle preferences, she added, with regional NSW outperforming Sydney.

“I think with the ability to work remotely, we have seen it drive demand to outer suburban locations but also regional areas as well,” Dr Powell said.

A blonde woman smiles at the camera
Dr Powell says the pandemic has created a surge in demand for property in regional areas of NSW.(Linkedin)

Significant government support measures, a “remarkable rebound” in consumer confidence, mortgage holidays and a reduction in property market activity during the lockdown period influenced last year.

“All those things together did help to support prices, but that dip in price we recorded mid-year was short lived for houses,” she said.