A surge in demand from inventors is continuing to drive up residential property prices in Australia’s two biggest cities, with Sydney recording its fastest annual growth in more than 14 years.

The latest CoreLogic home price index for February revealed that prices rose by 2.6% last month in Sydney, bringing the annual price rise to 18.4% – the strongest annual pace of growth in the city since December 2002.

Strong gains for Melbourne and Canberra pushed property prices 1.4% higher over the month and 11.7% up over the past year.

“We’re actually seeing more strength in Sydney and Melbourne than we’ve seen over the last few months,” CoreLogic’s head of research (Australia) Cameron Kusher told ABC News Online.

Kusher accredited the pick-up in the market to a sharp rise in property investment, particularly following the Reserve Bank’s decision to cut interest rates twice last year.

He continued: “It’s pretty clear it’s not coming from first home buyers at the moment, we’ve pretty much got record low levels of first home buyer activity.

“Quite clearly it’s coming from the investor segment of the market – both domestic investors and foreign investors – as well as people who already own homes upgrading.”