Comparing the Brisbane and Melbourne Property Markets

Introduction

The property markets in Brisbane and Melbourne, two of Australia’s major cities, have always been subjects of interest and comparison among investors, homeowners, and analysts. Each city presents unique characteristics, economic drivers, and investment opportunities. In this article, we delve into a comparative analysis of the property markets in Brisbane and Melbourne, examining key metrics and trends with data provided by CoreLogic.

Economic Overview

  • Brisbane: Brisbane, the capital of Queensland, has been experiencing steady economic growth, fuelled by its diverse economy. Industries such as resources, construction, tourism, and education contribute significantly to its GDP. The city’s affordability and lifestyle offerings attract both local and interstate migration, driving demand in the property market.
  • Melbourne: Melbourne, Victoria’s capital, stands as Australia’s second-largest city and a major economic hub. It boasts a diverse economy with strengths in finance, healthcare, education, and technology. Melbourne’s vibrant culture, world-class amenities, and strong employment opportunities continue to draw migrants, supporting its robust property market.

Property Price Trends

  • Brisbane: According to CoreLogic data, Brisbane has seen extraordinary growth in property prices over the past year, with a median dwelling value of $787,000, made up of a median house price of $565,294 and a median unit price of $387,158. Brisbane now has the third-highest median dwelling value among the capitals, trailing Sydney and Canberra.
  • Melbourne: Melbourne’s property market has historically shown strong growth, although it experienced a temporary slowdown due to the COVID-19 pandemic with the median dwelling value now sitting at $780,000, a median house price of $859,097 and a median unit price of $564,785 according to CoreLogic data, falling below Brisbane’s median dwelling value by $7000. 
  • Despite boasting a higher median dwelling value, Brisbane falls behind Melbourne in terms of median house and unit values by -$72,000 and -$49,000 respectively. This variance can be attributed to Melbourne’s larger proportion of units within the dwelling market. CoreLogic’s estimates reveal that units constitute 33.8% of Melbourne dwellings, whereas they only make up 25.6% of homes throughout Brisbane. Given that units typically have lower values compared to detached houses, the higher proportion of units in Melbourne drags down the overall median dwelling value across both houses and units.
  • In the short term, this compositional discrepancy may experience some adjustment. Recent building activity data from the Australian Bureau of Statistics (ABS) indicates that as of June last year, there were 1.4 units under construction for every house in Victoria, contrasting with 1.6 units for every house in Queensland. This suggests a potential increase in the concentration of unit stock forthcoming in Brisbane.

Rental Market Dynamics

  • Brisbane: Brisbane’s rental market remains competitive, with steady demand for both houses and units. The city offers relatively high rental yields compared to Sydney and Melbourne, making it attractive for investors seeking rental income. CoreLogic data indicates a median rental yield of around 4.4% for houses and 5.2% for units in Brisbane.
  • Melbourne: Melbourne’s rental market is also robust, fuelled by strong population growth and a thriving economy. However, rental vacancy rates have seen some fluctuations, particularly in the wake of the pandemic. Despite this, Melbourne continues to offer solid rental yields, with CoreLogic reporting median yields of approximately 3.1% for houses and 4.1% for units.

Supply and Demand Dynamics

  • Brisbane: Brisbane’s property market benefits from a relatively balanced supply and demand dynamic. While there have been pockets of oversupply in certain suburbs, overall demand remains supported by population growth, infrastructure development, and lifestyle amenities. The Queensland government’s initiatives to boost construction and stimulate the economy further contribute to the market’s stability.
  • Melbourne: Melbourne has faced challenges related to oversupply in certain segments, particularly in the apartment market. However, strong demand driven by population growth and investor interest has helped absorb excess supply over time. The Victorian government’s investments in infrastructure projects and urban renewal initiatives play a crucial role in shaping the city’s property landscape.

Conclusion

In conclusion, both Brisbane and Melbourne offer diverse opportunities in their respective property markets. Brisbane stands out for its affordability, steady growth, and strong rental yields, while Melbourne attracts investors with its prestige, vibrant lifestyle, and resilient market performance. Investors and homeowners should carefully consider their objectives, risk tolerance, and market conditions when making decisions in either city’s property market. With careful analysis and understanding of local dynamics, investors can capitalize on the opportunities presented by these dynamic Australian cities.

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