Melbourne’s housing market is hotter than Sydney’s, according to property researcher CoreLogic.
Property investors are more active in Sydney, meaning a regulatory crackdown on investor lending is having a more pronounced effect in Sydney than in Melbourne.
But Melbourne is benefiting from strong interstate migration and asking prices that still look comparatively affordable.
Home values in Melbourne surged 1.4 per cent over the past week, faster than a 0.7 per cent rise in Sydney, according to the CoreLogic data. Melbourne home values rose 5 per cent over the past month and 16.8 per cent over the past year, outstripping Sydney’s gains of 3.1 per cent and 13.6 per cent respectively.
“Auction clearance rates have been stronger in Melbourne than Sydney for most of this year and the population growth story is a big one as well,’’ CoreLogic head of research Cameron Kusher said.
The median house price in Melbourne was much lower, at $710,000, compared with $950,000 in Sydney.
Both states still have strong economies and good job prospects, he said. But interstate migration was going from “strength to strength” in Victoria and “starting to fade” in NSW.
“People are still choosing Melbourne because they think they still have a chance in the housing market, whereas they probably don’t feel like they have that chance in Sydney any more,’’ Mr Kusher said.
The Sydney market had generally been stronger except for a period about a year ago, but Melbourne had started to overtake the harbour city over the past one to two months.
The more moderate growth in Sydney follows a five-year bull run in which values surged nearly 19 per cent over the 12 months to March, before starting to cool.
Banks have been clamping down on investor lending in response to pressure from regulators worried about the risks of high household debt.
As investors make up about 55 per cent of new mortgage demand in NSW compared with about 46 per cent in Victoria, discouraging investment lending would have more of an impact in Sydney than Melbourne, Mr Kusher said.
Across the capitals, dwelling values have fallen only twice in the past 20 years, in 2010-11 and 2011-12.