Melbourne houses and units narrow price gap on declining Sydney

Melbourne houses and units narrow price gap on declining Sydney
Melbourne houses and units narrow price gap on declining Sydney

The price gap between houses in Melbourne and Sydney is at its narrowest in four years, according to the Domain March Quarter 2018 House Price Report.

Sydney house prices have reported the largest quarterly decline since December 2015. 

In the March 2018 quarter, Sydney houses fell 2.6 percent, with the median price now just over $1.15 million.

House prices in Sydney fell 1.4 percent annually, marking the city's first annual decrease since mid-2012.

House prices in Melbourne increased again, reaching $914,518 in March, a 0.1 percent quarterly increase.

It marked 22 consecutive quarters of growth for the Victorian capital. 

Following a 15-month stretch of double-digit annual growth, however Melbourne house prices growth slowed to a three-year low of 8.8 percent year on year.

The $ price difference for houses is now $200,000.

Back in 2015 when Sydney went through the $900,000 barrier, the price gap was $260,000, with Melbourne house's sitting at $638,000.

At Sydney's peak in the June quarter 2017, the median house price stood at $1,178,417, a price difference of $312,705 to Melbourne's $865,712 median.

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Melbourne houses and units narrow price gap on declining Sydney

Sydney units also slipped back closer to Melbourne.

They fell 0.5 percent in the March quarter and 0.6 percent annually.

The move marks almost a decade since both house and unit prices in Sydney decreased over the quarter and year.

Domain's Dr Nicola Powell said the trend was identified late last year.

“Following marginal quarterly growth in December, house and unit prices in Sydney continued to soften over the March quarter, a trend first identified in September 2017.

"Although both house and unit values declined, units softened moderately compared to house prices in March, demonstrating the impact of the affordability hurdles of purchasing a home in the Harbour City.

“New South Wales is experiencing an increase in first home buyer activity, which is being driven by government incentives.

"The increased demand at the entry-level price point may support price increases at the lower end of the market.

"However, it remains to be seen whether the Banking Royal Commission will prompt stricter mortgage lending standards, making credit harder to attain."

Melbourne unit prices delivered another quarter of improvement, rising 0.7 percent to reach a median value of $505,861.

Melbourne was the only capital city with unit growth over the March quarter.

Annually, units in Melbourne rose 7.9 per cent.

"While Sydney is currently dealing with the impacts of decreased investor activity, Melbourne has always been an owner-occupier led market, and is somewhat less exposed to investor movements relative to Sydney," Powell said.

“Ongoing price growth in the Victorian capital is being supported by the city’s rising population, strong employment growth and lower affordability hurdles.

"Although there are certain pockets of Melbourne impacted by heightened unit supply, overall the city delivered the strongest annual growth in eight years."

 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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Melbourne Sydney

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