'A special kind of hell': Property prices in the US may be sky-high, but some Australian homebuyers are seeing home prices shoot up by almost $1,000 a day

• Property prices in the US may be heating up, but so are those down under in Australia.
• One realtor told Insider he saw 20% increases in property prices within a matter of months.
• Sydney's property prices are rising by AU$1,220 ($766) every day, with the median price of homes nudging toward $1 million AUD.

First-time home buyer Gregory Anderson says his journey to find a home in Sydney is "a special kind of hell."

Speaking to Insider about his quest to find a starter home, Anderson, 31, detailed how almost every listing he and his wife Sophie, 30, looked at was vastly out of their budget. What made it worse for the couple was how the price of apartments - even in suburban areas further from the city center - seemed to inch upward every day.

"It was depressing enough when we started house-hunting in January when we could already barely afford most listings. Then we started seeing these crazy price increases in March, of at least a $70,000 Australian ($53,000) rise in the asking price on places we were interested in," Anderson said.

The couple went to view properties that were two-bedroom starter homes going for close to a million dollars after being priced out of bigger properties. Anderson told Insider that he saw homes going for around AU$1.4 million ($1.07 million) for a three-bedroom. To date, they still have not bought a home and are living out of a rental property.

"Houses are now way out of our reach. Maybe in twenty years, or perhaps not even then if things keep up," Anderson added.

It's a sentiment many American home buyers can relate to - even as a new survey showed that as many as two-thirds of millennials who purchased homes in the last year say they now regret the decision. But while homeowners in the US are beginning to feel the hangover of an overinflated COVID-conscious market, Australia's prices continue to rise.

What's happening in Australia's housing market?

Sydney's skyrocketing housing market is just one example of the Great Australian Real Estate Grab. The coastal city of 5.3 million, known for its opera house and stunning beaches, saw housing prices increase by around AU$1,220 ($935) each day, according to the Sydney Morning Herald,

That means that home prices rose an astounding AU$36,600 ($28,000) over May.

Business Insider Australia's Jack Derwin reported that the median price of a property in Sydney is set to break AU$1 million ($766,500) by the end of June. Prices of houses in Sydney exceeded the AU$1 million mark in March last year, while Melbourne saw its median house prices crossing AU$1 million this April for the first time in the city's history.

But the gains in Australia's housing market may be heavily built on huge amounts of debt. Hal Pawson, professor of housing research at the University of New South Wales, told the Guardian that the Australian government's "cheap money," in the form of low interests and generous grants, have helped the market rate for homes shoot up.

Home loan companies are currently offering fixed rate loans for as low as 1.75%, though that fixed rate only lasts for one year and is subject to variability.

"Cheap money is the most important thing by far," Pawson said. "It's the ability to take out AU$150,000 ($115,000) more on a mortgage than you could have had a year ago on the same salary."

And realtors are bolstering that "cheap money" with further low- or no-deposit deals and cash rebates worth thousands of dollars.

Australia's frenzied market mirrors a trend in the US, where the real estate market is similarly over-heating.

Statistics released by the National Association of Realtors indicated that the median price for existing homes reached a historic high in March, hitting an average of $329,100 per home. In March, the Wall Street Journal also noted that the prices of homes in the US were increasing at the fastest rate in 15 years. Housing prices rose 11.2% last year amid a housing shortage. This is happening while more millennials enter the property market and remote workers looked to purchase property further from their offices.

Property prices in the US were edging up steadily even before the worst of the pandemic. Insider reported on this trend last July, citing a June 2020 survey of 1,000 homeowners, which found that some 42% of people who bought houses during the pandemic secured their property through bidding wars.

Why is Australia's property market booming now?

Tim Lawless, head of research at the Asia-Pacific arm of consumer and financial data firm CoreLogic, told Insider that a range of factors drive up prices in the housing market. Still, the core of it lies in demand for housing far outweighing supply.

"The low number of listings against such a high level of market activity has created a sense of urgency amongst buyers, which is another factor placing upwards pressure on housing prices. This 'fear of missing out,' or FOMO, means buyers are making their purchase decisions in near-record time and not negotiating very much at all on price," Lawless said.

He referenced CoreLogic's data, which indicates that the prices of houses in Australia will continue to rise throughout this year and most of next year.

"Most recently, Sydney has once again stood out for showing the strongest growth trend. Values here are up 9.3% over the three months ending May, the strongest growth rate over any three months since 1988," he said.

He acknowledged, however, that the rate of growth for housing prices will not stay at the current levels.

"Worsening affordability will gradually impact on buyer activity. Additionally, new housing supply is ramping up with house approvals moving through record highs," Lawless said, adding that the country's borders remaining closed - and the consequently lower migration rates - will have an impact on relieving the demand for housing.

Just how out of hand is the Australian real estate market? A realtor weighs in.

Realtor James Folino, an independent realtor who works on Australia's Gold Coast, told Insider that he saw prices of houses going up at least 10% to 20% within the last three months.

Folino added that properties that previously might be on the market for 30 to 45 days are now selling for five to seven days, with prices on houses, particularly those with land attached, going up by some 30%.

Folino cited a coastline property in Gold Coast that he handled, which sold on February 11 this year for AU$720,000 ($551,000). It was sold again three months later, on May 14, for AU$937,500 ($718,000). This made a hefty AU$217,500 ($167,000) profit for the owner within three months.

He also handled a mega-mansion that was sold off in 2018, then made a AU$3 million ($2.3 million) profit within three years when it sold again last week. This amounted to a AU$20,000 ($15,300) price increase per week.

Folino told Insider he's not certain that the boom will last.

"No one has a crystal ball, but booms do stop and have a correction. My opinion is when the banks increase the interest rate, we will see a flattening in the market," Folino said.