Sydney, Melbourne or… Brisbane?
As any savvy property investor knows, timing is everything. And according to the latest report by PRD Real Estate, the time is ripe for buyers in Sydney and Melbourne.
The report found that median property price growth slowed over the last six months in Sydney and declined in Melbourne compared to the previous six-month period. This shift in conditions favours buyers who have been waiting on the sidelines for an opportune moment to enter the market.
The latest data from the Sydney Metro property market shows that median prices for houses increased by 5.6% to $1.97m over the first three months of the year, while units saw a more modest increase of 0.9% to $882,000. However, sales between the first quarter of 2021 and the first quarter of 2022 declined in both housing segments, down by 9.6% for houses and 11.7% for units. With fewer properties changing hands, it's likely that prices will continue to trend upwards in the coming months as buyers compete for a smaller pool of available homes.
According to the PRD report, a total of $10.6bn worth of projects that include mixed-use and residential development are planned across the first half of 2022, which could help replenish the supply in Sydney. Key indicators show the market is experiencing a turn and the economy is entering a new phase of a higher cash rate and less fiscal and government stimulus. However, the medium to long-term outlook for the Sydney property market remains positive, with conditions expected to improve from 2023 onwards as population growth increases and interest rates remain low by historical standards.
Melbourne Metro's housing market has taken a turn in price growth, providing more affordable conditions to potential buyers, according to the PRD Real Estate report. Over the first three months of the year, median prices in Melbourne declined by 1% to $1.14m for houses and by 0.8% to $630,000 for units. On a yearly basis, sales declined by 10% for houses and 7% for units. These conditions indicate that the Melbourne Metro market is becoming more accessible to a wider range of potential purchasers.
For the first half of 2022, a total of $25.5bn worth of projects, most of which are focused on commercial plans and infrastructure, are expected to commence. This is a significant decrease from the $37.7bn worth of projects that commenced in the first half of 2021. The report attributes the slowdown to a number of factors, including stricter lending criteria and a decrease in population growth. However, Melbourne still remains one of the most liveable cities in the world and is still expected to attract buyers from all over Australia and overseas.
However, in terms of price growth, the city that continues to outperform both Sydney and Melbourne is Brisbane. The median price for a house in Brisbane is now $950,000, an increase of 28.2% from the previous quarter. For units, the median price is $489,000, a 5.8% increase from the previous quarter. Sales volume declined during this period, which could be attributed to worsening affordability in Brisbane. Nevertheless, Brisbane remains an attractive option for investors and developers, thanks to its strong fundamentals. With population growth expected to continue, Brisbane is likely to experience strong demand for housing in the years ahead.