Melbourne takes the lead on the property market
It has been speculated about for some time, but it finally appears to have happened – Melbourne has emerged from the shadow of Sydney to become the nation's strongest property performer for the past year. As the heat continues to ease in Australia's largest city, the Victorian capital has just slipped ahead in the latest figures.
CoreLogic RP Data shows Sydney's year-on-year median house price growth at 10.5 per cent following a 2.1 per cent drop in the final quarter of 2015, while Melbourne sits at 11 per cent. The difference between the actual prices is still large – $776,000 compared to $595,000, but should Sydney's decline remain so much steeper than Melbourne's, it won't be long before that gap narrows down to nothing.
As the heat continues to ease in Australia's largest city, the Victorian capital has just slipped ahead in the latest figures.
"Previously, during the height of the growth phase, there was a large separation between Sydney's housing market, which was streaking ahead, and Melbourne's, where the rate of capital gain was substantial but still well below the heights being recorded in Sydney," says Tim Lawless, CoreLogic RP Data head of research.
"In fact, over the past six months, the performance gap between Sydney and Melbourne is stark. Sydney dwelling values have reduced by 0.6 per cent between July last year and the end of January 2016, compared with a 3.0 per cent rise across Melbourne dwelling values".
Meeting demands through construction
The strengthening median house prices in Melbourne are clearly driven by intense demand, in part due to the similarly growing number of residents. Numbers compiled by the Australian Bureau of Statistics show that the Victorian capital's population grew by 2.2 per cent in 2013-14, again outstripping growth in Sydney.
Should this trend also continue, Melbourne will soon become the most populous city in Australia. In preparation for this event, construction of high-rise dwellings in the city has climbed to staggering new levels. Commonwealth Bank of Australia (CBA) reports that the apartment boom is happening across all of the capital cities, but Melbourne is leading the charge and accounting for 46 per cent of all new construction.
For anyone interested in buying property in Melbourne now, the escalating prices and fierce competition may make it seem like a difficult market. However, CBA estimates over 1,800 apartment completions in the CBD in 2016 followed by anywhere up to 5,000 the next year. It may be worth while making your intentions known to a Melbourne buyer's agent sooner rather than later.
New house sales falling … but not in Melbourne
The Victorian capital is continuing to shine in another area of the real estate industry – new home sales. The latest index from the Housing Industry Association (HIA) shows detached house sales fell by 4.1 per cent nationally over the three months to November, however HIA's Victorian Executive Director Gil King comments that Melbourne once again showed resilience not seen elsewhere.
It may be worth while making your intentions known to a Melbourne buyer's agent sooner rather than later.
"It is pleasing to see that in Victoria, we 'bucked' the trend and private detached house sales increased by 3.3 per cent in November 2015," he said. Mr King does remain guarded on whether this unique strength can sustain.
"It would appear unlikely for approvals and sales activity to gather further momentum in 2016 in the face of tightened credit conditions and decelerating housing price growth".
The evidence that the Victorian capital is evolving into Australia's hottest real estate market is becoming difficult to ignore. Should you wish to be a part of this exciting section of the nation's property, make an appointment with one of Cohen Handler's Melbourne buyer's agents.
Whether you're a first home buyer interested in one of the thousands of new apartments, or an experienced investor eyeing growth opportunities, Cohen Handler can help you every step of the way.