Melbourne is attracting Sydney buyers for its affordability and lifestyle options. Picture: Getty
Some Sydney property buyers may be increasingly turning their attention to Melbourne to position themselves for the next property wave.
Experts explain that lower entry costs, big rebates and a growing population provide a compelling case for home buyers and investors.
The Melbourne market’s relative affordability compared to Sydney is the key factor drawing buyers with the price differential for comparable properties in each city.
In March 2020, at the pandemic’s start, Sydney’s median house price was 26% higher than Melbourne’s – or a dollar difference of $192,000, PropTrack data shows.
It was in mid-2021 when the two prices began moving further away from each other, going from a 29% variance in January 2021 to 45% by year-end.
The current difference between the 12-month rolling median house price in Sydney and Melbourne is $455,000 – a 52% variance.
By July 2023, the Sydney median was $1,330,000, and Melbourne was $875,000.
Melbourne’s lower price point and low vacancy rate for rentals also provides an opportunity for higher rental yields for astute investors.
Melbourne ranked as the world’s third most liveable city in the Economic Intelligence Unit’s 2023 Global Liveability Index, just ahead of Sydney in fourth spot.
The list considers five factors: stability, culture and environment, healthcare, infrastructure and education. Melbourne scored a total of 97.7, with a perfect 100 in three categories.
Whether for its vibrant offering of arts, culture, sport and hospitality, or its wealth of green spaces and nature hotspots, Melbourne’s lifestyle appeal remains strong.
That interest is reflected in federal government population projections that forecast Melbourne’s total number of residents will rise from around 5.1 million to 6.1 million by 2031 – surpassing Sydney’s position as largest city in Australia.
Oliver Hume’s Head of Research George Bougias said the medium and long-term outlook for Melbourne property prices remained positive, with the population growth directly affecting need for homes.
“Melbourne’s population is forecast to grow almost 20% over the next decade, creating a significant demand for housing,” he said. “With increased demand, we will likely see continued strong price growth, which would be great news for investors.”
Julian Coppini and George Bougias from Oliver Hume will be sharing their expertise at the Melbourne Property & Land Expo.
Bougias said Melbourne also presented a compelling case for Sydney buyers looking to relocate for lifestyle reasons, as well as affordability.
“With increasing numbers of people able to work from home, the focus on lifestyle has never been greater,” he said.
“Melbourne has long been regarded as Australia’s cultural capital, and the city’s vibrant, diverse culture focused on sport, dining, and events is one of the reasons why so many people are moving here.”
In an environment of reduced borrowing capacity due to higher interest rates, this price differential can make a huge difference when it comes to the quality and location of properties available to purchasers.
Julian Coppini, Oliver Hume’s Chief Executive Officer Project Marketing, said shifting your life or investment capital out of Sydney and into Melbourne made sense in the current market.
“The Sydney and Melbourne markets were in lockstep for many years pre-Covid but over recent times have developed their separate cycles and characteristics, giving buyers the opportunity to leverage the differences,” he said.
Melbourne is the third most liveable city in the world in 2023. Picture: Getty
“The key difference is obviously the price gap for comparable properties. A million dollars does not go very far in Sydney, but you can get a great property in Melbourne in a great location and with good growth potential.”
Coppini said rising interest rates since May 2022 had left developers with excess stock they were keen to sell.
“Buying in a prime location like Melbourne in a relatively flat property market represents a good opportunity to take advantage of substantial offers and rebates offered by land and property developers,” he said.
“We haven’t seen this level of incentives available for many years in Melbourne, and we don’t expect it to last as interest rates stabilise and local buyers return to the market.
“We are already starting to see demand pick-up, which means the developer incentives will give way to a more competitive market and rising prices.”
Land is currently for sale at Jubilee in Wyndham Vale, in Melbourne’s thriving west. The community has its own aquatic centre, complete with water slides, junior fun zone and a gym.
The opportunities available for prospective home buyers and investors will go under the spotlight at the Melbourne Property & Land Expo on September 9-10, 2023.
The two-day expo will be held at the Castle Hill RSL at 11am-5pm on the Saturday and 11am-4pm on Sunday.
Oliver Hume’s National Head of Research, George Bougias, will hold twice-daily seminars covering a range of property types for buyers in Melbourne – including land, townhomes, apartments and lifestyle living communities for over 55s.
Entry to the expo is free and will feature 14 different projects in Melbourne and surrounds with incredible savings on offer by participating developers, including Frasers Property Group, ID Land, Villawood Properties, Land Real, Mondous Property Group, HB Land and Lotus Living.
Land will be available starting from $225,000.
Don’t miss out – visit the event page to register your attendance.