This article is from the Australian Property Journal archive
THE changing hierarchy of housing values across Australia’s capital cities – which has seen Melbourne fall from second to sixth, and Brisbane, Adelaide and Perth leap ahead – is the product of the speed of change in home values as well as the composition of housing, CoreLogic has detailed.
In CoreLogic’s latest Pulse, research director Tim Lawless said at the onset of COVID in March 2020, Sydney had the highest median dwelling value, followed by Melbourne, the ACT and Brisbane, while Perth was in seventh, after Darwin with the lowest median, followed by Adelaide.
In August 2024, Melbourne’s median dwelling value of $776,000 is ranked sixth, ahead of only Darwin ($504,000) and Hobart ($655,000).
“The difference between Sydney and Melbourne’s median dwelling value is now 52.1%, the largest differential between Australia’s two largest capitals since June 1999,” he said.
Meanwhile, the gap between Sydney’s median of $1.18 million and that of the mid-sized capitals has narrowed substantially. Sydney is still 35% higher than Brisbane, but that is the narrowest difference since July 2013, while the 49% premium over Adelaide’s median is the narrowest since May 2013 and the 50.3% premium to Perth’s median hasn’t been this narrow since June 2015.
The past five years has seen national dwelling values rise by 47.9%, but with extreme diversity from city to city. Perth has led the pace of gains with a 76.4% rise in values since August 2019, while Brisbane values have surged 71.5%, and Adelaide by 70.8%.
At the other end of the spectrum are the major cities – Melbourne values have increased 19.8% and Sydney by 43.1%.
“Such a rapid pace of growth in housing values across the mid-sized capitals has been a key factor driving the shift in median dwelling value rankings,” Lawless said.
The past 12 months has seen a continuation in this diversity of housing conditions, with the 25.6 percentage point range in annual growth rates across the capital cities now the widest since the height of the mining boom in 2006.
Multiple factors that have contributed to different speeds of change across the capital cities since the start of the pandemic.
Lawless said marked differences in net interstate migration trends were the result of strict, extended social distancing restrictions the led to a “push” factor from Melbourne, while Brisbane, Perth and Adelaide likely benefited from Melbourne departures.
South Australia and Western Australia saw net interstate migration trends move into positive territory through the pandemic for the first time in a number of years. Internal migration data to the end of 2023 showed net interstate migration to Victoria was still in mildly negative territory, while NSW, Tasmania, Northern Territory and ACT were all fairly negative.
“New housing supply is another aspect driving divergence in the growth trend, with Victoria seeing far more dwelling completions than any other state or territory in the past decade, and ACT seeing an ongoing trend of elevated unit completions.
“Housing affordability was far less stretched across the mid-sized capitals leading into the pandemic due to a prolonged period where values didn’t rise anywhere near as much as Sydney and Melbourne over the previous growth cycle.”
Lawless said a key factor in the median dwelling value of Perth and Adelaide overtaking Melbourne is the underlying mix of housing types.
The median dwelling value measures the 50th percentile valuation estimate of all houses and units combined. When measuring median house and unit value separately, Melbourne is still showing a higher median across both housing types than Perth and Adelaide, he noted.
“The difference comes back to the composition of dwellings and the fact that Melbourne has densified more substantially and rapidly than the mid-sized capitals. In August, CoreLogic estimates a third (33%) of housing stock in Melbourne falls within the multi-unit sector, compared with 25% in Brisbane and 16% of housing stock in Adelaide and Perth.”
Because unit values are typically lower than house values, the higher portion of multi-unit dwellings in Melbourne weighs the median dwelling value down relative to cities with a skew towards lower density housing.
Comparatively, over the past 15 years, the composition of Perth dwellings moved from 13% within the multi-unit sector to 16%. Similarly, Adelaide moved from 14% to 16%. Over the same time frame, Melbourne’s multi-unit sector has increased from 23% of all housing to 33% and Sydney has increased from 31% to 39%, CoreLogic data shows.
Hobart, where 18% of dwellings fall within the multi-unit sector, and Darwin (36% multi-unit) have a larger portion of medium- to high-density dwellings than Perth and Adelaide.
Annual dwelling completions data shows this trend perpetuating. Multi-unit sector across housing in Western Australia and South Australia comprised just 9.5% and 14.5% of all dwelling completions over the 12 months to March – clearly less than half the national average of 33.8%, and below the portion of multi-unit sector completions across every other capital city.
