According to PropTrack, Melbourne home values have only increased by 15 percent since Covid (March 2020).
Over the same period, Sydney has risen by 30 percent, Perth by 46 percent, Brisbane by 56 percent and Adelaide by 60 percent.
In other words, Melbourne has seen half the growth of Sydney, a third of the growth of Perth and a quarter of the growth of Brisbane and Adelaide over the last four years.
That is a remarkable difference.
Why is Melbourne property underperforming? I thought we were the most livable city in Australia, and one of the top 10 in the world?
I thought we had the strongest population growth of any city in Australia, set to take over Sydney by 2030?
This is a complex issue with countless explanations, which we clearly don’t have the time or desire to fully unpack in a Jellis Craig new listings email.
I stumbled upon a Reddit thread on the topic (not the most reliable of media sources). The punchiest comment explaining Melbourne’s underperformance being, “Melbourne weather sucks.”
Sage words.
Many punters blame the heavy taxation on property in Victoria, with one Redditer claiming the Andrews Government imposed 50 new taxes on property (needs to be fact checked) – from land tax to Airbnb tax to vacant property tax.
Clearly with onerous taxation on investment properties and new tenancy laws that are seen to be unfavourable to landlords, many investors have thrown the towel in and are offloading their Melbourne properties en masse.
We have seen this as a major driver in the volume of sales for ‘transactional’ stock across our Richmond and Armadale office over the last 18 months.
Another interesting observation is that Melbourne is surrounded by vast swathes of land that is easily developed into new house and land packaged suburbs, keeping the median house price down.
Sydney’s geography is far more restrictive so land comes at a huge premium.
Whatever the cause – and this is just scratching the surface – Melbourne has severely lagged behind other capital cities in house price growth in recent years, even as our population soars and housing supply and approvals fall further and further behind the impending demand.
Surely, at some point, Melbourne will catch up and start batting at or above our average.
Rarely, if ever, have we diverged so far from Sydney’s property prices, without eventually converging again, albeit at a lower median price.
Underperformance now could spell opportunity in the future.
Watch this space.
Feature Property: 11 Woodside Crescent, Toorak
David Sciola 