Sydney and Melbourne: a tale of two cities
The land of Australia is a diverse place, full of jungles and deserts, coastlines and mountains. But if there’s one consistent factor across the country, it’s the rivalry that appears whenever Sydney and Melbourne start butting heads.
Whether it’s sport, culture or property, these two urban giants are constantly out to one-up each other. Let’s see who is coming out on top with real estate.
Living it large in Sydney
Sydney has been one of the most popular cities for investors for a number of years.
Sydney has been one of the most popular cities for investors for a number of years. This could easily be the major reason why it is still one of the most expensive places to live in the country, according to CoreLogic RP Data, and also home to the most premium suburbs. These areas are so premium, in fact, that you could buy two houses in Toorak, Melbourne for the same price as a single house in Darling Point, Sydney.
However, it looks like these kinds of suburbs are coming out on top in terms of median value growth. CoreLogic reports that the suburbs on the upper end of the price scale in Sydney are growing by 8.8 per cent over the past year, compared to 6.6 per cent of those in the middle market. This matches the trend of the national average, where it appears that demand is growing for those areas with a higher price tag. Seeing as Sydney property is already on the upper end of property compared to the rest of the country, this is certainly a doubling down of success for those who own premium NSW real estate.
Meanwhile, land supply issues continue to bite at the Harbour City. Residential land sales have dropped by 22.3 per cent over the December 2015 quarter, the worst of any capital city, while CoreLogic and the Housing Industry Association also tell us that land prices have gone up. This could have a serious effect on housing supply as people run out of affordable land to build on, driving prices up even further. Could Sydney values grow more this year?
Rapid expansion in Melbourne
Things seem to be going extremely well for everyone from first home buyers to property investors.
Meanwhile, in Melbourne, things seem to be going extremely well for everyone from first home buyers to property investors. The median property values continue to climb, having toppled Sydney as the best-performing city over 2015, and the city continues going from strength to strength.
And it isn’t just those with properties in the expensive areas that are benefiting from these value gains. A recent CoreLogic report reveals that Melbourne is bucking the trend of the most expensive properties performing the best in terms of value growth, as more moderately-priced properties in the area dominate with a 10.5 per cent growth average. Affordable housing is beginning to catch up with 9.7 per cent gains, though higher-end real estate is still holding its own with a 10 per cent increase.
Melbourne has also managed to score huge marks from the Housing Industry Association, playing host to the second-most significant property hotspot in the country. Cranbourne East, having received almost $330million in new residential building approvals as well as a 32 per cent population boost over 2014/2015, is an exemplary suburb for this growing city.
However, there could be some problems on the horizon for the Victorian capital. The deputy executive director of the Property Council in Victoria describes how new tax laws that make Melbourne “a more expensive city to invest in than Sydney” for foreign investors, potentially stifling the city’s continued growth through a lack of overseas capital. This new legislation could affect the strong housing supply increase that Melbourne has seen, which could push prices beyond the reach of the average Australian.
We hope this quick rundown has given you a better idea of what area is more suitable for you to invest in. If you want high value growth, then Sydney could be the place for you. Greater affordability and plenty of new construction? Melbourne is calling you home. For more information, make sure you get in touch with a local real estate agency!