Up until 2004, the median Melbourne dwelling price remained a constant 60 to 70 per cent of the Sydney median dwelling price. Since then, however, Sydney median house and unit prices have had subdued growth, while Melbourne has been one of the country’s best-performing property markets, particularly in the last 12 months.
So what does this mean? The median Melbourne dwelling price for the March 2010 quarter of $522,000 is now 94 per cent of Sydney’s $558,000, the highest the ratio has ever been.
The relative strength of price growth in the last year has been a major contributor, but there is one other reason. The median dwelling price is calculated using the median house and unit prices, weighting them based on the proportion of houses and units in each city. Sydney has a much larger proportion of units (26.5 per cent compared with 16.7 per cent for Melbourne), which means the higher median house price contributes less to the median dwelling price.
One unusual fact that comes out of this is that Melbourne, although having significantly fewer dwellings than Sydney, actually has more houses thanany city in Australia.
With annual population growth in Victoria running at 2.2 per cent and driving demand in Melbourne, when compared with New South Wales’ 1.7 per cent growth, it is not hard to imagine Melbourne soon seriously challenging for the crown of Australia’s most expensive median priced city.