Sydneysiders are turning to Melbourne as their property hotspot of choice, as rampant price growth in their own harbourside city is pricing them out of the market.
While both cities have enjoyed a boom in housing prices, the average home in Melbourne is generally cheaper – new apartments sometimes by up to 40 per cent – and Sydneysiders are realising their dollar will go much further in the Victorian capital in terms of affordability, capital growth and rental returns.
As well, buyers across the spectrum – from first home buyers to empty nesters – are discovering that Melbourne’s gentrified lifestyle in inner-city suburbs can be enjoyed for a significantly lower cost.
It’s a trend that we’ve noticed in the sales of our apartments at the Pace of Collingwood development. At the display suite, we hear first-hand from both Melbourne and inter-state buyers what their reasons are for actively looking to buy in Collingwood. Sydney buyers have stated again and again that they simply cannot find a property in Sydney for under $500,000.
This progressive price differential between the capital cities is increasingly putting Melbourne in a favourable spotlight.
Sydney’s growth of 14.8 per cent in 2015 compares to Melbourne’s growth rate of 14.5 per cent in the same year. And with Sydney’s prices already higher, Melbourne becomes a much more achievable goal for first home buyers especially.
The median house price in Sydney as at December 2016 was $1.12 million, $324,553 more than Melbourne’s median of $795,447 at the same time.
As well, changes in the stamp duty in Victoria are putting first home buyers in a much better position. At the end of 2016, there were more Sydney suburbs with a median house value of $2 million or more than those with a median house price under $600,000. Therefore, even if NSW were to adopt the same changes to stamp duty, the property market would still be out of reach for the majority of first home buyers. There are simply fewer houses for the first home buyer to look at.
It doesn’t take much insight to see that the swift gentrification of many Melbourne suburbs, with new restaurants and boutique stores opening up in the area regularly – as well as the steady growth of property prices – will be an unbeatable asset.
Our sales team report that buyers are citing three main reasons for their interest in buying in the area: location, value, and community. Prices for our Pace of Collingwood apartments range from $440,000 for one-bedroom, and go up to $1.1m for a three-bedroom, two-bathroom with two car parks spaces.
Compare this to an average of $700,000 and $1.2m respectively in a similar Sydney suburb such as Redfern, which is about 3 kilometres from the Sydney CBD.
To date, we’ve sold just shy of 10 apartments to Sydney buyers; and we are also liaising regularly with about 20 interested parties from Sydney. They have overwhelmingly stated that the value in Melbourne, and in particular Collingwood, is simply unavailable in Sydney, where property prices, already out of reach for most, are continuing to rise.
It’s not just inter-state buyers who are asking; local interest is also very strong. Collingwood is well known for its sense of community, and many locals are keen on either buying or renting long-term in the area. Collingwood’s location, at just over 1 kilometre from the CBD, permits the hustle and bustle of an inner-city lifestyle with the option to retreat to the local community easily.
About the Blogger
David Lamond is the sales director for the development Pace of Collingwood.