The four-plus years since the beginning of the pandemic have seen Sydney’s house prices race away from Melbourne’s.
Sydney dwelling values have risen by 39% since March 2020, according to PropTrack, easily outpacing the 15% increase recorded in Melbourne:
Property pundit Michael Yardney posted the following chart from PropTrack on Twitter (X) showing that Melbourne’s house prices are the cheapest relative to Sydney’s in at least a decade:
“Sydney has always commanded a premium versus Melbourne”, wrote Yaedney. “But recently, that premium has hit historic extremes”.
“Today, median house prices in Melbourne are approximately 41% cheaper than in Sydney”.
“This is the cheapest houses in Melbourne have been relative to Sydney in the last 20 years”, said Yardney.
The following chart plots Sydney’s house price as a ratio to Melbourne’s using Domain’s median house price series:
According to Domain, Sydney’s house prices are the most expensive relative to Melbourne’s since 2005.
CoreLogic shows even more variation between Sydney and Melbourne dwelling values, with the differential now 52.1%—the largest since June 1999:
Source: CoreLogic
CoreLogic research director Tim Lawless attributed Melbourne’s slower price growth to two primary factors:
- Melbourne saw an abnormally large outflow of residents during the pandemic; and
- Victoria has seen stronger housing supply than the rest of the nation.
Melbourne’s weakness also relates to the decline in investor demand following tax hikes and deleterious policy changes by the state government:
The good news for aspiring Melbourne first home buyers is that housing has become relatively affordable.
