Property price growth data shows that in the last Quarter, Melbourne property has out paced Sydney’s to become Australia’s hottest property market as at Aug 2015
Property price growth in Melbourne and SydneyLatest property price data from PRData shows that in the last quarter Melbourne property price grew 7.85% out pacing Sydney price growth at 6.66%. Month on month price data also shows a similar trend, Melbourne price growth outpacing Sydney’s, overall and for houses. Though Sydney’s unit prices grew faster than Melbourne the difference was only 0.06% between the two or in practical terms they were the same.
In recent years Melbourne has shown some reasonable price growth but until the last quarter have been outpacing Melbourne’s by a large amount. With Sydney’s property prices now so high many believe that they are unaffordable. There have also been reports that property investors looking to buy in Sydney have been turned off by the high prices and are now turning to Melbourne where prices have been rising at steady pace. Now that Melbourne’s price growth appears to have overtaken Sydney’s investors chasing capital gains may also be more attracted to Melbourne.
Melbourne property has not had the attention from property investors that Sydney has had with a larger proportion of owner occupiers. However, if investors now find Sydney too expensive or decide to target Melbourne which has in the last quarter become the hottest property market, this may be the start of a flood of investors to Melbourne property.
Auction clearance rates in Melbourne and SydneyRecent auction clearance rates show a similar trend to the property price growth in Melbourne and Sydney. Over previous five weeks Melbourne’s auction clearance rates have shown a steady building increase from 74% five week ago to 75%, 76% , 77% to 80%. Sydney’s auction clearance rate though having 80% last week have showed a decreasing rate previously from 78% five weeks ago to 76%, 76%, 73% before last weeks jump back to 80%.
Is Melbourne a good place to invest in property?Invest where people want to live, especially where people who have wealth want to live as this is the demand side of what drives up property prices. People want to live in Melbourne. Melbourne has been named the world’s most liveable city for the fifth year in a row, achieving a near perfect score on the Economist Intelligence Unit’s (EIU) liveability survey of 140 cities. Each year thousands more people move from NSW, mostly Sydney to Victoria, mostly Melbourne than go the other way. Melbourne has the greatest number of people immigrating to it than any other Australian city. The ABS forecasts that given current levels of migration and fertility rates, Melbourne will overtake Sydney as Australia’s biggest city by 2053.
It is not all Melbourne’s way though. Vacancy rates in Melbourne at 2.3% are however, slightly above that in Sydney at 1.8% as of July 2015, according to SQM research data. However, both cities have lower than the national average vacancy rate at 2.4%.
Latest data also shows that rental yields are also slightly lower in Melbourne than in Sydney.
ConclusionThis data does not mean that Sydney’s property prices will not continue to grow, there is every indication that the it will continue to grow into the future. The data does suggest that Melbourne is now the hottest property market and may catch up to Sydney over the coming years.
Only time will tell if Melbourne will continue to be Australia’s hottest property market!
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