3 reasons why Melbourne's property market is stronger than Sydney's

Investing in Melbourne might be higher on many property buyers’ agendas at the moment, as there are plenty of indicators that the city’s real estate market is performing well. In fact, some analysts believe this could be the year when the Victorian capital really comes into its own, as the evidence points to better conditions than in Sydney.

Here are three reasons why Melbourne’s best suburbs could be taking the attention away from Sydney in 2016.

1. Steady price growth

Many investors look for steady markets when they buy property. Areas that experience boom-like conditions can be cause for concern as the saying goes, what goes up, must come down.

The latest Residential Property Price Index (RPPI) from the Australian Bureau of Statistics (ABS) shows conditions are just right in the Victorian capital. In September 2015, the RPPI showed a 2.9 per cent quarterly rise in property prices. Year-on-year, the increase stood at 9.9 per cent.

This points to a sustainable market, especially when looked at in the context of the other ABS figures. Sydney’s annual increase in prices registered at 19.9 per cent, while Perth property prices declined 3.3 per cent compared to a year earlier.

2. Pulling away from the pack

Results of the January CoreLogic RP Data Hedonic Home Value Index showed that Sydney is starting to slip behind its Victorian counterpart. Although its median dwelling price is significantly higher – $776,000 compared to $595,000 there’s every reason for investors to get excited about buying in Melbourne’s best suburbs.

CoreLogic RP Data Head of Research Tim Lawless said: “The latest data reveals Sydney’s housing market is now playing second fiddle to Melbourne’s, at least in annual growth terms.”

3. Future growth expected to be strong

This trend hasn’t just been confined to late-2015 and early this year, as experts also expect further growth over the remainder of 2016. The CoreLogic-Moody’s Analytics Australian Forecast Home Value Index predicts that Melbourne’s property market will once again outperform Sydney.

Home values are predicted to increase 7.2 per cent in the city this year, before slipping back to 1.3 per cent in 2017. Growth in the Harbour City might not be quite so robust, making now a good time to think about investing in Melbourne real estate.

For advice on investing in Melbourne, get in touch with Nelson Alexander. We’ve been helping people invest since 1971 and with 15 offices across the city, we’re in a good position to aid your search.