Melbourne set to overtake Sydney as top property market
Melbourne and Sydney have long enjoyed a healthy rivalry.
To Melbourne, Sydney lauds its beautiful harbour. In return, Melbourne extolls the virtues of its dynamic suburbs, thriving restaurant and bar scene, and jam-packed major-events calendar.
While Sydney has always laid claim to having Australia’s premier real estate market, some experts believe Melbourne has all the fundamentals in place to take out top spot.
Here’s a few reason why Melbourne is outshining Sydney for savvy buyers and investors…
In case you haven’t heard, in 2016 Melbourne was awarded the title of the world’s most liveable city for the sixth consecutive year by The Economist’s Intelligence Unit. The annual Global Liveability Index assesses 140 cities around the world in the areas of stability, healthcare, culture and environment, education and infrastructure. Melbourne scored a jaw-dropping 97.5 out of a possible 100, but perhaps even more impressive is that the city has consistently ranked in the index’s top three since it began in 2006.
Meanwhile, last year Sydney dropped out of the top 10 altogether.
For the last five years Sydney’s real estate market has surged forward at breakneck speed. Figures from the Australian Bureau of Statistics (ABS) show that Sydney house prices have on average increased 70% in this time. This has pushed huge amounts of the market well out of reach of many Sydneysiders.
Sydney’s growing lack of affordability has seen many buyers look to Melbourne for greater value. While this has pushed Melbourne’s prices higher, property in Melbourne is still far more affordable than it is in Sydney.
Results for the three months to December 2016 show that the median house and apartment price in Sydney was $1.12 million and $711,000, respectively. In Melbourne the median house and apartment price was $795,000 and $459,000, respectively.
That means, on average, apartment in Melbourne are approximately 35% more affordable than those in Sydney.
Sydney’s has been the star performer or several years and as such, it has grabbed the lion’s share of the headlines. But Melbourne is not far behind.
In 2016 dwelling prices rose 15.46% in Sydney, while Melbourne was right on its heels with an increase of 13.68%. However, the good news for those eyeing Melbourne is that the market still has significant up-side thanks to the city’s booming population.
While Melbourne is currently a far more affordable option than Sydney, it is no certainty that it will stay this way. Especially, as Melbourne has the fastest growing population in Australia.
Figures from the ABS show that Victoria’s population grew by 2.1% over the 12 months to September 2016, outpacing the national average of 1.5%. This growth is forecast to continue well into the future with Melbourne forecast to leap over Sydney and become Australia’s most populated city by 2050.
Louis Christopher, founder of SQM Research, states Melbourne is growing at a rate of about 100,000 people each year.
“A lot of those people do have money to go and buy property and that’s what they’ve been doing,” he says.
Heightened construction activity
In its recent State of States report, CommSec reported that midway through last year the value of construction work completed in Victoria was 16.6% higher than the average for the decade.
Melbourne’s property market is reflecting the city’s strength as a diverse economic and cultural powerhouse. With sustained population growth ahead, the city’s real estate market is expected to enjoy ongoing positives for years to come.
31 October 2017 News