Whether you’re considering making the move interstate or investing in either the Brisbane or Melbourne market, it’s important to realise just how different these two markets can be. Housing affordability, bank lending conditions and cost of living can differ significantly between the two cities, not to mention the significant influence of State Government regulations and laws. According to the latest Heron Todd White property clock, the market in Brisbane for apartments is starting to recover, while the Melbourne property market is declining. But one look at the skyline of the CBD in these two cities tells a different story.
While there are a number of infrastructure and residential developments in Brisbane central, the number of cranes pales in comparison to the Victorian capital. With new developments under construction on every street corner, the Melbourne CBD is undergoing a complete transformation likely to last the next five years at least. Will this land Melbourne in a similar spot to Brisbane in creating an oversupply of apartments, or is the population growth of Melbourne significant enough to sustain the increased development? While only time can tell, we can infer by comparing the style of apartments and other residential offerings. While Brisbane is now shifting strongly towards larger, owner-occupier focused apartments in the CBD and surrounds built for inner-city professionals, the Melbourne CBD markets are still very much targeting overseas investors, with more success than Brisbane. Asian investment in Melbourne is currently stronger in the southern state than in Brisbane, with large-scale infrastructure developments funding as well as residential apartment purchases.
When analysing the two markets side-by-side, there’s much more to consider than just average house prices. We compare housing affordability, population growth, investor regulations and infrastructure development between Brisbane and Melbourne, to help you decide where best to spend your money and your time.
For the moment, Brisbane properties are more affordable than those in Melbourne (with both remaining far more affordable than Sydney). However, according to CoreLogic forecasts, within two years Brisbane will see up to 10% of houses fetching over $1 million when sold. The growth rate for the Brisbane property market is likely to be in the range of 3% to 5% this year, with Melbourne anticipated to be between 1% and 3%. Brisbane offers a much lower median house price of
$563,666 compared to $809,468 in Melbourne, and with a higher percentage rental yield average, Brisbane is an attractive market for interstate property investors.
For more information on general cost of living and affordability comparison, Budget Direct has a great Cost of Living comparison tool.
According to recent reports, the population of Greater Brisbane is likely to register a strong growth for the next 10 years during which an average of 62,410 new people will make Greater Brisbane their home. In 2018, the population growth rate was projected to be 2.3%, which is expected to drop to 2.1% in 2026 and remain steady. As the new population moves into the city, it will drive up demand for residential properties. Family households, as well as lone person households, are likely to witness the largest increase in demand. Melbourne on the other hand, leads the country in terms of population growth, and also rates as one of the 10 fastest growing large cities in the developed world. Overall property values in Melbourne in the coming years will be underpinned by a robust economy and job growth. Melbourne also ranks in at Australia’s strongest population growth and the influx of 35% of all overseas migrants, with a population expected to increase 10% in the next 4 years along.
Foreign investors are set to bear a large brunt of the steep decline in stamp duty revenue the government took in over the previous financial year. Heritage property and residential landowners will also be affected, as the Victorian Government attempts to offset a $5.2 billion shortfall in stamp duty due to the weakening property market. Property prices have fallen by about 10% over the last year, whilst the number of transactions has fallen by about 15% during the same time period, meaning these tax increases come at an inopportune time. Foreign investor duty will rise from 7% to 8% from July 1 2019, in addition to approximately 3,000 foreign owners having their absentee owner tax rise from 1.5% to 2%. The increase in foreign investor stamp duty will bring Victoria more in line with other states in Australia, including Queensland (which had foreign investor stamp duty increase to 7% as of July 1 2018.
For first home buyers, Victoria offers a $20,000 first home owners grant for properties purchased within regional Victoria, those looking to buy in Melbourne city will be able to apply for a grant of a maximum of $10,000, while first home buyers in Queensland have access to the $15,000 first home buyers grant, applicable to new-build properties only but regardless of the location of the property.
In Melbourne, major infrastructure projects including upgrades to the train station and train lines as well as a new six-lane arterial road connecting the area are expected to maintain the momentum and keep the Southbank and Docklands area a hotspot for development throughout the rest of this year and 2020. While there may be fewer cranes in the sky, Brisbane is currently experiencing the biggest infrastructure spend since the 2011 flood recovery, with a new runway at the airport, a new international cruise terminal, the Cross River Rail Project and the impressive Queens Wharf all in the works at the moment.