New world order: Surprise cities climbing the residential ranks

There’s been yet another changing of the guard in Australian property along with the arrival of spring. 

Rarely seen in close to four decades of real estate record keeping, Melbourne values have dipped below those of Adelaide and Perth, signalling a shake up for capital city property prices. 

In June, Brisbane’s median dwelling value had already surpassed the Victorian capital and Canberra to take out second place on the CoreLogic totem pole, and now just two months later, it has fallen to fifth on the list.

Cost of living pressures and a continued plateau in the official cash rate by the RBA has resulted in a quieter than average winter in real estate. CoreLogic’s September Home Value Index revealed that national home values rose only 0.5 per cent during August, representing 19 months of consecutive increases.

Smaller city standouts

For much of the past two years, Perth, Adelaide and Brisbane have led the pack in terms of growth rates among Australia’s capital cities. Perth, in particular, has seen extraordinary growth with values up 23.24 per cent annually, followed by Adelaide at 15.12 per cent and Brisbane at 13.95 per cent. 

This rapid rise has propelled both Perth and Adelaide prices past Melbourne. The South Australian capital’s median dwelling value is now at $790,800 while Perth’s is $785,250, compared to $776,044 for Melbourne - now the third lowest median among the capital city markets. Only Darwin and Hobart are now cheaper.

Melbourne’s market explained

It’s the first time Perth’s median dwelling value has been higher than Melbourne’s since February 2015, when the city was coming off an iron-ore boom. Adelaide has never recorded a median value higher than Melbourne in CoreLogic’s 40-year dwelling value series.

Melbourne’s real estate landscape has been on a downward trend for six consecutive months, which is attributed to a range of factors, from affordability constraints and elevated interest rates, to changes in investor sentiment and Victorian tax levies. 

What’s also worth noting is that Melbourne is a unit-heavy market, where apartments account for approximately a third of the city's housing stock—compared to just 16 per cent in Perth and Adelaide. This skew toward unit prices drags down the overall median dwelling value and, in reality, median house and unit values across Perth and Adelaide are still lower than in Melbourne.

Dwelling values over the quarter

Melbourne

Currently with a dwelling median sitting at $776,044, after a quarterly fall of -1.2 per cent, Melbourne is  now one of Australia’s more affordable cities according to CoreLogic data. Since the onset of Covid in March 2020, the Victorian capital’s median has increased by 10.1 per cent, representing an average $71,196 move in home prices. Currently, the gross rental yield is 3.7 per cent, however investors are collectively reevaluating their property portfolios since the introduction of a new Victorian land tax on non-primary residences.

Sydney

The median value of homes in Sydney is $1.18 million after a modest three-month movement of 0.8 per cent. At the beginning of the pandemic, Sydney’s median was $263,838 less but has since  risen 28.8 per cent. The gross rental yield for investment properties in the Harbour City is currently 3.1 per cent.

Brisbane

Still holding its spot as Australia’s second priciest city for residential real estate, Brisbane’s median dwelling value is $875,040 after a quarterly increase of 2.9 per cent. Back at the start of Covid, the Queensland capital’s median was $344,896 less but has subsequently soared by 65.1 per cent. Today the gross rental yield for the city is 3.7 per cent.

Canberra

The national capital was knocked out of second place back in June and recorded a slight -0.2 per cent decrease in the median dwelling value for the quarter to $845,875. Home values have risen an average of $201,558, or 31.3 per cent, since the start of the pandemic. The gross rental yield in Canberra is 4.1 per cent.

Perth

On an incredible trajectory since March 2020, Perth’s median home value has skyrocketed 72.5 per cent to $785,250. Over the last three months it was also home to the country’s largest capital city quarterly increase of 5.7 per cent. Perth’s gross rental yield is sitting at 4.3 per cent.

Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (September 2024) 

Call us to today on (02) 4344 7144!