Melbourne and Sydney are Australia’s biggest cities by a long shot. Both hold roughly 5 million residents, they attract our highest rates of tourism and are internationally renowned. Unfortunately, because they are the most well-known, the mainstream media throws both property markets into the same bucket when assessing. Sensationalist reports roll the two together to make broad brush predictions. In reality, the Sydney and Melbourne property markets are vastly different, they have different levels of population growth, different economies and they contrast in geography. As a result, the markets are currently both at very different stages.
|Capital City||Auctions||Clearance Rate||Properties sold|
|Total Australian Capitals||25,824||57.8%||14,926|
Quarter 2, 2018 – Australian Clearance Rates (Source: CoreLogic)
The real difference can be seen through each city’s clearance rates – a key metrics in measuring market demand. According to data presented in CoreLogic’s Quarterly Auction Review, there were 25,824 auctions throughout our capital cities in the June quarter of 2018 (a 24.7% increase on the previous quarter). From this, 12,330 of these auctions were in Melbourne, which is almost half of our nations property sales and even though it held 3,000 more auctions than any other capital, Melbourne still holds the second highest clearance rates in Australia.
Another significant factor is the real number of net sales. An extra 2,300 properties were sold in Melbourne than in Sydney, over just one quarter (not to mention in a market with less residents and less dwellings). The strength of Melbourne’s housing market has been further highlighted by the quarterly “Pain and Gain” report, indicating 98.7% of Melbourne houses were sold at a gain – higher than every other capital.
So, demand for dwellings is still high in Melbourne, and property is still holding up strongly in resales. The city has just been announced as one of the fastest growing in the world, and is now located in the strongest performing economy in the country. The capital city vacancy rate is at 1.6% and falling, while Sydney’s is at 2.8% and rising.
Overall, the demand for property is linked directly to population growth (something that Melbourne has in abundance). The capital city has grown at a rate faster than Greater Sydney, year on year, for 16 years straight.
When you take a look at the real data, is becomes pretty clear the two markets can’t be grouped together so easily. Sydney may be heading into a well overdue period of stagnation, but Melbourne holds the key economic drivers that will aid in creating demand for the foreseeable future.