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The Sydney slowdown is prompting a Melbourne home selling wave

March 6, 2018 9:00 am by Upside

Sydney house price growth is slowing and even reversing by some estimates, with the latest ABS data showing Sydney property values dropping -1.4% over the quarter from June 2017 to September 2017.

While the prospect of a burst property bubble seems to be scaring away some property investors from the Sydney market, the good news is that Melbourne is seeing an uptick in home sales as property owners and buyers look to the city as being Australia’s next big property hotspot.

And the proof is in the pudding, too. CoreLogic’s data for January reports a yearly increase of 8.04% in Melbourne property values – showing that attention is shifting away from the Sydney market and onto Melbourne.

What’s behind the Sydney housing market slowdown?

Chinese investment in the Sydney property market has fallen over the past year, in part due to stricter investment regulations. Research by investment bank Credit Suisse found that Chinese capital has a major impact on Sydney housing prices, with this downward trend set to affect property demand over the year ahead.

With Sydney being Australia’s most expensive property market, many local residents face affordability constraints – which impacts levels of home ownership. Tighter lending restrictions by APRA – aimed at reducing financial stability risks – have also made it more difficult for people to access the funding needed to buy property.

Traditionally, long-term growth cycles in housing markets tend to be followed by a downturn, so a further decrease in Sydney property values isn’t out of the question.

Melbourne & Sydney real estate markets compared

While both Melbourne and Sydney saw a slight cooling off in January compared with December, recent data also shows that in the long term, Melbourne is showing robust growth across both houses and units, while Sydney is flattening out.

Sydney and Melbourne home values January 2018

All Dwellings:

City Month End Value % Change Year on Year % Change Month on Month
Sydney 171.44 1.26 -0.86
Melbourne 156.65 8.04 -0.18

Houses:

City Month End Value % Change Year on Year % Change Month on Month
Sydney 176.55 0.11 -0.80
Melbourne 165.43 8.00 -0.17

Units:

City Month End Value % Change Year on Year % Change Month on Month
Sydney 159.15 3.97 -0.99
Melbourne 132.37 8.17 -0.19

Source: CoreLogic

The latest housing market update by CoreLogic also gives us a glimpse into Melbourne’s steady takeover from Sydney as Australia’s most active housing market. On average, properties in Melbourne fly off the shelves faster and are discounted less. The number of Melbourne properties is also on the rise, with new and total listings in December surpassing Sydney’s figures:

Average days on market

Sydney: 36 days Melbourne: 31 days

Average rate of vendor discounting

Sydney: -5.2% Melbourne: -4.3%

Number of new listings

Sydney: 2,001 Melbourne: 2,656

Number of total listings

Sydney: 19,953 Melbourne: 25,152

The slowdown in Sydney property sales coupled with Victoria’s booming population (faster than any other state) is proving to be the secret recipe for a promising Melbourne real estate market outlook for 2018.

Thinking about selling your home in Sydney or Melbourne? Book your no-obligation property appraisal with one of our agents, or get a free online property value estimate. It takes less than a minute to make your request, and our report comes with an array of useful information such as historic sales data for your suburb, and comparable sales to your home in the area.