With Sydney’s property prices continuing to rise to ever more unaffordable levels, residents are turning to Melbourne for more affordable alternatives.
While both capitals have enjoyed a major boom in house prices, the average home in Melbourne is generally cheaper than in Sydney (sometimes by up to 40% for new apartments).
Indeed, many Sydneysiders now realise that their money will go much further in the Victorian capital in terms of affordability, capital growth, and rental returns.
Melbourne is undergoing a remarkable revitalisation, and the city’s population is forecast to overtake Sydney’s in the coming decades.
New residents are drawn to the Victorian capital by the healthy job market; exciting new housing developments; and a more laidback, cosmopolitan lifestyle.
Property buyers across the spectrum, from first-home buyers to empty-nesters, are discovering that Melbourne’s gentrified lifestyle in the inner-city suburbs can be enjoyed for a significantly lower cost than in Sydney.
It’s a trend that David Lamond, sales director for the Pace of Collingwood development, has noticed.
“At the display suite, we hear first-hand from both Melbourne and inter-state buyers what their reasons are for actively looking to buy in Collingwood. Sydney buyers have stated again and again that they simply cannot find a property in Sydney for under $500,000,” he said.
The widening price difference between the two capitals is increasingly putting Melbourne in a more favourable spotlight.
The median house price in Sydney was $1.12m in December 2016—which was $324,553 more than Melbourne’s median of $795,447 during the same quarter, according to the Domain Group’s House Price Report for December 2016.
By March 2017, Sydney’s median house price had jumped to $1.15m, compared to Melbourne’s $843,674, according to the Domain Group’s State of the Market Report, March 2017.
Moreover, changes in stamp duty in Victoria are putting first-home buyers in a much better position.
Towards the end of last year, there were more Sydney suburbs with a median house value of $2m or more than those with a median house price under $600,000.
Therefore, even if NSW were to adopt the same reforms to stamp duty, the property market would still be out of reach for the majority of first-home buyers.
“There are simply fewer [affordable] houses for the first-home buyer to look at [in Sydney],” Lamond said.
He had nothing but optimism for those who’re thinking of investing in Melbourne’s residential property market.
“It doesn’t take much insight to see that the swift gentrification of many Melbourne suburbs, with new restaurants and boutique stores opening up in the area regularly – as well as the steady growth of property prices – will be an unbeatable asset.”