Affordability, a more balanced market and higher interstate and overseas migration all favour the southern city.
In the month of June, Melbourne’s median dwelling price rose 2.71 per cent compared to Sydney’s increase of 2.21 per cent, according to CoreLogic.
Over the year to 30 June, Melbourne continued to outpace Sydney’s price growth recording a 13.7 per cent increase in the median dwelling value to $913,060, while Sydney achieved 12.2 per cent to a median of $1,118,020.
The difference in the median house price between our nations largest cities is also a driving factor, as Melbourne is considerably more affordable than its neighbouring rival.
These lower prices are partly responsible for attracting further interstate migration into Victoria whilst migration into NSW dwindles, says senior research analyst at CoreLogic Cameron Kusher.
The latest 2016 Census revealed Melbourne grew more quickly then Sydney, adding 1,859 people per week between 2001 and 2016, compared to 1,656 people per week in Sydney. Whilst Sydney remains our nations most populous city with a population of 4.8 million, Melbourne isn’t far behind with 4.5 million.
Kusher notes that another driving factor for Melbourne’s strong performance is that there are more properties advertised for sale in Sydney.
“There are currently 13.3% more properties advertised for sale in Sydney than at the same time last year, while in Melbourne listings are just 0.1% higher than a year ago,” said Kusher. So people looking to buy in Sydney have greater choice, which keeps price growth contained, he said.
This might explain why recent auction clearance rates recorded last week were higher in Melbourne than Sydney with 77.4 per cent achieved compared with 72.9 per cent.
Finally, Kusher notes that Sydney’s housing market is more susceptible to external economic & financial markets sensitivities such as changes to our interest rate environment because a higher proportion of Sydney’s housing market is made up of investors.
Investors accounted for 55.1% of new mortgage demand in NSW compared to 44.6% in Victoria.
“If the higher interest rates are discouraging investment (as they appear to be),” says Kusher, “it is going to be having a much bigger impact on market demand in Sydney than in Melbourne given their much higher level of participation.”
Read more about Melbourne & Sydney real estate here.
