For the first time since the gold rush of the middle of the 19th century, Melbourne is on track to overtake Sydney as the nation's most populous metropolis during the 2020s. This will give Melbourne an advantage over its traditional adversary in terms of its political power, global stature, and economic strength.
Greater growth is being driven by rising birth rates, consistent international migration, and people moving from interstate and regional centres, which will boost the populations of Melbourne and Sydney to around 6 million by the middle of the year 2026.
But by the end of that year, Melbourne's population will have surpassed that of Sydney, and it is anticipated that the gap will continue to increase.
Melbourne's population is expected to become home to 75 percent of Victorians. The most recent forecasts indicate that during the next six years, it will grow at a rate that is approximately 28 percentage points quicker than Sydney. Its national political influence, global status, and reach as a centre for multinational corporations as well as key cultural and sporting events will all improve as a result of the country's rising population.
The most significant population creates a gravitational attraction that will begin to draw more global organizations, big events, and the headquarters of national and regional institutions. This will happen in the area that has the most significant population. The fact that the city in question is the largest in the country will also be attractive to new establishments.
CoreLogic, a company that tracks changes in property prices, reports that the median price of a home in Sydney is $776,000, while the median price of a home in Melbourne is $619,000.
But at the same time, home values in Melbourne are skyrocketing, and the city's infrastructure is struggling to keep up, particularly in the western suburbs.
It is estimated that the government will spend over $14 billion annually on infrastructure over the next four years, which is approximately three times as much as was spent on infrastructure in the ten years leading up to 2014.
Because of this, Melbourne's real estate market is projected to surpass that of Sydney in 2020, thanks to the city's more robust economy and greater rate of population growth. On the other hand, it is anticipated that the rapid pace will slow down as the number of listings increases and affordability decreases. It's possible that Melbourne's property market may beat Sydney's by the year 2020, thanks to the city's robust economy and favourable demographic dynamics.
Even though the rapid price growth that has been visible over the previous few months is expected to be continued, the high rate of population growth, low rate of unemployment, and cheaper property prices relative to Sydney should all assist support additional gains in home values next year.
After remaining away from the market during 2019, it is anticipated that investors will flood back into the space in droves, attracted by the prospect of higher potential financial gains and more affordable financing.
It is anticipated that investors will be driven by the opportunities for capital expansion as well as the cheap cost of debt in the business.
Although rental yields continue to be low, they are still higher than the cost of the mortgage, which means there are a lot of prospects for positively geared homes as mortgage interest rates continue to fall.
Here are the top three reasons why the real estate market in Melbourne is more healthy than that in Sydney
There are numerous indications that the real estate market in Melbourne is operating well, which means that investing in property in the city may be higher on the agenda of many property purchasers at the present time. Because the evidence suggests that conditions will be better in Melbourne than in Sydney, some observers say that this year will be the one in which the capital of Victoria comes into its own.
-
Unchanged growth in price
When looking to make a real estate purchase, many investors look for markets that are considered to be generally stable. Because "what goes up must come down," as the proverb puts it, regions that experience situations similar to booms can be a cause for concern because "what goes up must finally come down."
The most recent Residential Property Price Index (RPPI) released by the Australian Bureau of Statistics (ABS) shows that conditions are at their best in the city that serves as Victoria's state capital. As of September 2015, the RPPI revealed that property prices had climbed by 2.9 percent on a quarterly basis since the beginning of the year. In comparison to the previous year, this figure represents a 9.9 percent rise in total.
This provides some support for the idea that there is a market that can be sustained, particularly when taken into account in conjunction with the other numbers that have been published by the ABS. In comparison to the previous year, real estate prices in Sydney experienced an increase of 19.9 percent year over year, while real estate prices in Perth experienced a fall of 3.3 percent year over year.
-
Separating from the group
The results of the CoreLogic RP Data Hedonic Home Value Index for the month of January show that Sydney is starting to lag Victoria, its closest similar market, more and more. Despite the fact that the average property price in Melbourne's best suburbs is significantly more than the rest of the city ($776,000 as opposed to $595k), there are plenty of reasons for investors to be enthused about purchasing in these locations.
At least in terms of annual growth, Tim Lawless, Head of Research for CoreLogic RP Data, claimed that "the latest data reveals Sydney's housing market is currently playing second fiddle to Melbourne's."
-
It is anticipated that future growth will be robust
This pattern has not been restricted to the latter half of 2015 and the first few months of this year; rather, industry experts forecast sustained expansion throughout the duration of 2016. According to the CoreLogic-Analytics Moody's Australian Forecast Home Value Index, it is projected that the real estate market in Melbourne will once again fare better than that in Sydney. This is the case despite the fact that Sydney is currently experiencing a housing market boom.