Would you leave Sydney and move to Melbourne to afford to buy property?
As much as Emma Fraser and Shahmeer Abbasi wanted to live in the city they’ve called home all their lives, the couple also understood the harsh reality of buying a property in Sydney.
“We didn’t take house hunting as seriously in Sydney because we knew we couldn’t buy or build a house in Sydney unless we wanted to be miles and miles away,” Fraser says.
The couple, who’d been renting a two-bedroom apartment in Sydney’s CBD at $800 a week, looked at the price of houses in Melbourne and were blown away.
“Sydney’s just so expensive,” Fraser says. “We were renting an apartment in the CBD, which we moved into during COVID so the rent was pretty affordable. And then over the years, it just went up.
“But we used that time to save for a place of our own.”
For context, Sydney’s median house price is at a record $1,627,625. In Melbourne, the median is $1,032,020 – that’s a $595,605 difference.
Fraser and Abbasi were hunting for a four-bedroom house because they both work from home full-time and wanted a study each, as well as enough space for their dog to play around.
They found and bought a four-bedroom house in Manor Lakes – about 40 minutes from Melbourne’s CBD – with two bathrooms, a double garage and a backyard.
Even greater than the median house prices of each city is the price difference between four-bedroom houses in Sydney and Melbourne. Sydney has a four-bed median of $1.525 million and Melbourne is $905,000 – a $620,000 difference.
“We had a look at the new estates in Sydney and they were so expensive and so far from the city,” Fraser says. “Because we were already in the middle of the city, we wanted to stay nearby but it was out of our price range.
“So we just decided to move to Melbourne and we got exactly what we wanted for about $700,000 … the difference in prices between Sydney and Melbourne was pretty significant.”
According to the latest Domain Forecast Report, Sydney’s house prices are set to rise between 6 and 8 per cent by the end of FY25 (between $1.73 million and $1.76 million). In comparison, Melbourne’s house prices are expected to rise at a more modest rate of between 0 and 2 per cent (leaving prices between $1.03 million and $1.05 million).
“House prices in Sydney are going to see stronger gains than Melbourne, and in Melbourne, prices are going sideways over the next 12 months,” says Domain chief of research and economics Dr Nicola Powell.
“That gap will absolutely widen and I think what that’s going to create is greater levels of affordability in Melbourne, relative to Sydney.”
However, Powell says both cities offer different attractions for buyers.
“Sydney is highly desirable in terms of lifestyle but the affordability barriers do mean that many have to reconsider where they’re going to live,” she says.
“The attractiveness that Melbourne offers is greater affordability and the realisation of achieving the Australian dream of owning a home sooner.”
Real estate agent Reece Beckley of Barry Plant Werribee says many of his buyers are Sydneysiders relocating to Melbourne.
“I mean, we always had buyers from Sydney but there have been a lot more Sydneysiders in the market, from owner-occupiers to investors,” Beckley says. “And they’re all looking for properties around that $700,000 to $800,000 mark, but they have capacity to pay more.”
Lisa Parker of Parker Buyer Advocates says she has also noticed a rise in inquiries from Sydney buyers hoping to jump on Melbourne’s softened property market.
“House prices have been up and down and sideways a few times since 2017 and I think it just boils down to the fact that we’ve been sitting at very little growth in the preceding years,” Parker says. “Even though there have been periods of growth, we’ve not had tremendous growth year-on-year.
“Sydney buyers are now seeing Melbourne as undervalued … and I’m typically dealing with clients around that $2 million mark. They want to take advantage of the market now before prices start to increase more rapidly.”
Buyer’s advocate Cate Bakos of Cate Bakos Property says interest in Melbourne properties from Sydney investors and owner-occupiers has been “gaining traction over the years”.
“Right now, the disparity between Sydney and Melbourne is so big; it’s the biggest I’ve seen it,” Bakos says. “And the reason why they’re moving to Melbourne is affordability.”
While Victoria’s new land tax could drive landlords out of the state, Bakos says Sydney investors are willing to look beyond that.
“If anything, the changes to the land tax are upsetting more local investors than anyone else,” she says. “I’ve had Sydney investors say, ‘The land tax isn’t pretty, but we see the opportunity in Victorian property so when the market does rebound and correct, that opportunity will be significant and the land tax will pale in comparison.'”
Beckley adds that Sydney buyers are more competitive than Melbourne buyers, which is evident at auctions.
“I suppose they’re more accustomed to auction terms and how they work so they are pretty competitive when it comes to auctions and they see more value in real estate,” he says. “From their perspective, they’re like, ‘Geez, look at this, I can get an amazing yard, huge bedrooms for less than $1 million.’
“The comparisons are huge so they’re willing to be more competitive at auction than some Melbourne buyers.”
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