Melbourne’s property market is out-pacing Sydney’s. New data from Core Logic indicates it’s a trend that could well continue
With lower average property prices in Melbourne’s property market, and therefore better affordability – along with Sydney house prices at record highs – more people are looking to Melbourne’s property market to secure property.
In June, Melbourne’s median dwelling price rose 2.71 per cent, whereas Sydney’s increase was 2.21 per cent
In the past year to 30 June, Melbourne price growth also out-performed Sydney’s. Melbourne’s median dwelling price rose 13.7 percent (to $913,060), whereas Sydney’s median dwelling price rose just 12.2 per cent (to a median price of $1,118,020).
Melbourne’s auction clearance rates are also coming in higher – with a higher percentage of properties selling under the hammer each week – as well as houses selling a little more quickly than Sydney’s.
In Sydney, vendors are discounting houses 4.5 per cent on average to make a sale, compared with just 3.8 per cent in Melbourne
CoreLogic suggests there are four main reasons why Melbourne’s property market is likely to continue growing more quickly than Sydney’s
- Melbourne prices are lower than Sydney’s, so Melbourne prices are less vulnerable to corrections in the market
- Migration to Victoria continues to increase, while the number of people moving to NSW is dropping. Sydney now has a population of around 4.8 million, with Melbourne not far behind with 4.5 million people
- There are more properties for sale in Sydney – with 13.3% more listings than at the same time last year – whereas Melbourne listings are only 0.1% higher than last year – meaning there are a lot more properties for buyers to choose from in Sydney – which indicates a more competitive market for vendors, and pressure on upward price growth
- It is suggested that as interest rates rise, it will affect the Sydney market more than Melbourne’s, as there are a higher percentage of dwellings owned by investors in Sydney. In Sydney, data showed that 55.1% of new mortgages (excluding re-mortgages) were from investors, and 44.6% in Melbourne. So as higher interest rates discourage investment, this will have a broader knock on effect on Sydney’s prices
Top Sydney Real Estate agents have noted that six months ago, 80% of properties coming onto the market were being sold before auction – and now that number has halved
Buyers are being more cautious as Sydney prices move to unprecedented levels, lowering affordability for a growing numbers of households, now needing to look to other areas to get into the market.
Melbourne constantly ranks higher than Sydney in terms of quality of life, with excellent transport links, a walk-able city centre, and a range of lifestyle and cultural attributes.
The Sydney market does show signs of cooling down as Melbourne’s property market heats up
We have written in a previous article about the significance and importance of using credible data to drive your property investments. This new data gives an example of broader trends that could mean that in the medium term, Melbourne’s property market suggests a higher growth rate than that of Sydney’s.
What is of course critical in the property investment market is getting the best professional advice, building the right property team, researching and using the right data, and ensuring your property plan – including your particular risk profile – is produced and updated regularly.
So be sure to get in touch with us before you invest in any property.