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Melbourne property prices outgrow Sydney

Melbourne property prices outgrow Sydney

Melbourne suburbs have experienced the largest property value growth over the last 25 years, according to new research.

A report by Aussie Home Loans and CoreLogic has revealed that, over the period 1993 to 2018, of the 100 best-performing suburbs in Australia (based on property price growth), 41 were based in Melbourne, compared to 25 suburbs in Sydney and 12 in Perth.  

Median house prices in metro Melbourne grew by 8.1 per cent per annum (p.a.) over the last 25 years, compared to 7.6 per cent p.a. in Sydney and 6.7 per cent p.a. in Perth, according to the 25 Years of Housing Trends report.

Eighty-one of the top 100 suburbs were based in a capital city.

Topping the chart for price growth was a small suburb near Byron Bay on NSW’s North Coast called Suffolk Park, whose median house price grew by 1,496 per cent from $74,250 to $1.18 million over the 25-year period. Its average annual growth rate came to 11.7 per cent.

The next nine suburbs are all based in regional areas, with the outer suburb of Bunbury in Western Australia called Leschenault coming in second. Its median house price multiplied by 15.5 times from $34,000 in 1993 to $527,500 in 2018. The annualised growth rate in Leschenault across the 25-year period was 11.3 per cent.

Speaking of the findings, the CEO of Aussie, James Symond, said: “While it’s not a big surprise that suburbs in the two biggest cities came out on top, it’s worth noting nine of the top 10 are located in regional areas. These suburbs are generally in coastal or lifestyle locations, with strong performances in the south-west of WA and NSW’s Hunter and Illawarra regions.”

Leschenault was followed by Millfield in NSW, which experienced the same average annual growth of 11.3 per cent, with the median house price in 1993 coming in at $29,000, compared to $420,000 this year.

Next was Callala Bay, with an average annual growth rate of 11 per cent; Wattle Ponds, also at 11 per cent; Meadow Springs, at 10.9 per cent; Glen Iris, also at 10.9 per cent; Leda, at 10.8 per cent; Flinders, at 10.7 per cent; and Gundaroo, also at 10.7 per cent.

In the area of Sydney, NSW, the top suburb on property price growth was Currans Hill, which increased more than 12-fold from a median of $53,000 in 1993 to $655,000 this year. Its annualised growth rate was recorded at 10.6 per cent, according to the Aussie-CoreLogic report.

In the Melbourne area in Victoria, the top-ranking suburb on price growth was Flinders, similarly increasing more than 12 times from a median of $126,000 in 1993 to $1.51 million in 2018, with the suburb’s average annual growth rate recorded at 10.5 per cent.

Bulimba was the best-performing suburb in Brisbane, Queensland, with the median house price multiplying 10 times from $133,000 in 1993 to $1.3 million in 2018. The suburb’s average annual growth rate over the last 25 years came in at 9.5 per cent.

Andrews Farm topped the ranks in Adelaide, South Australia, with average median prices growing by 998 per cent from $24,225 in 1993 to $266,000 this year. Its average annual growth rate over the previous 25 years was recorded at 10.1 per cent.

The suburb of Bakewell in the Northern Territory’s capital city of Darwin was also a top performer, increasing from a median house price of $47,000 two and a half decades ago to $422,500 this year. Its average annual growth rate was 12.3 per cent.

Conder performed the best in Canberra, Australian Capital Territory, with its median price growing at an average annual rate of 10.4 per cent from $48,500 in 1993 to $581,375 in 2018.

Tasmania’s fastest-growing suburb based on house value growth was North Hobart, where the median price went up from $95,000 to $680,500 over 25 years, at an average annual growth rate of 8.2 per cent.

According to the joint Aussie-CoreLogic report, detached houses have been the primary driver of property price growth in the last two and a half decades.

“In fact, not a single suburb-level unit market made it onto the national top 100 list for price growth over the past 25 years,” the report states.

“The absence of unit markets from the top 100 list suggests the underlying land value has been the key driver of the best performers.”

The suburb of Willoughby in Sydney’s north topped the rank on unit price growth, rising at an average annual rate of 9.4 per cent from 1993 to 2018.

Mr Symond claimed that there have been “five property cycles” over the last 25 years and that he expects “the pattern of cyclic gains to continue”.

He said: “Major growth [will] come where a larger proportion of the population will seek to live closer to CBDs and transport corridors in better-designed apartments.”

The Aussie CEO additionally expects more households to take advantage of flexible work arrangements and subsequently a reduced need to travel to work.

“Without doubt, the next 25 years will produce even greater change,” Mr Symond said.

The same report revealed that median value of Australian houses could reach $2.9 million in the next 25 years, with the average mortgage size rising to $1.45 million. The report additionally states that national house values have risen at an annualised rate of 6.8 per cent.

In total, values have risen by 412 per cent since 1993, from $111,500 to $571,400.

[Related: ANZ ‘disappointed’ with housing affordability response]

Melbourne property prices outgrow Sydney
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