Victoria had been harder hit by economic uncertainty and Melbourne homebuyers are struggling with affordability Picture: Aaron Francis Source: The Australian
THEY are our two largest cities with a long-standing rivalry to match. But when it comes to property in 2012 the result is Sydney one, Melbourne nil.
Auction clearance rates, property prices and industry forecasts show Sydney’s residential real estate gathering pace while Melbourne is firmly placed as the country’s "most at-risk" market.
Last weekend, Sydney enjoyed its best auction result since the start of the year with 58 per cent of the 448 properties on the market sold.
In Melbourne - which usually enjoys a higher clearance rate than the harbour city - just 56 per cent of auctioned homes sold, down from 65 per cent on the equivalent weekend last year.
Project manager for BIS Shrapnel Angie Zigomanis said Victoria had been harder hit by economic uncertainty and Melbourne homebuyers were struggling with affordability after a boom before the GFC.
“Sydney may have more expensive property but in Melbourne people are spending a higher proportion of their income on mortgages,” Mr Zigomanis said.
On the supply side, a saturated real estate market pushed Melbourne house values down 6 per cent last year - only Brisbane is worse off, down 7.5 per cent.
“Last year 60,00 dwelling constructions were commenced in Victoria while BIS Shrapnel estimated that there was only a requirement for about 47,000, so there was well above what was needed,” Mr Zigomanis said.
Most of that oversupply was in medium and high-density developments, and a significant proportion of that is in Melbourne, he said.
In contrast, building levels in New South Wales, particularly Sydney, have been trending downwards over the past decade, even as the local population has continued to climb.
Last year 31,000 dwellings were commenced in NSW, the lowest level in 50 years.
Meanwhile, vacancy rates for rental properties across Melbourne have surged to a six-year high in an ominous development for the property market.
“The situation could worsen as new apartment blocks are finished. We expect vacancy rates to continue to edge upwards this year,” Mr Zigomanis said.
The National Housing Council estimates an oversupply of almost 17,600 units in Victoria this year blowing out to 22,900 in 2015 before any signs of improvement.
But Rohan Ames marketing manager for Melbourne developer R Corporation says it’s not all doom and gloom for the city’s homeowners.
“There are a lot of apartments on the market but there’s continued interest in townhouses, mainly due to changing preferences in homebuyer attitudes looking for an alternative to units or dated homes,” Mr Ames said.
“It’s a trend across Melbourne, both in established suburbs and the inner city.”
Others point out that Melbourne’s property downturn presents an opportunity that’s absent from Sydney, property bargains and affordable rent in premier postcodes.
APM senior economist Dr Andrew Wilson believes Victorian’s fragile economy will keep buyers sidelined for months in Melbourne.
“Melbourne’s property market is likely to remain flat overall with the local economy set to struggle through 2012,” Dr Wilson said.
“It’s questionable whether any earlier positive trend this year can be sustained through the year while Sydney should provide its usual solid results over the year reflecting the chronic underlying shortage of accommodation.”
Victoria’s lack of direct exposure to the mining sector was being felt in the Melbourne property market, he said.
Biggest falls in median prices 2011
St Kilda West: (Houses) -41.8 per cent
Caulfield East (Units) -29.1 per cent
Burnley (Units) -35.5 per cent
South Yarra (Houses) -24.3 per cent
Windsor (Houses) -23.8 per cent
Essendon North (Units)-16.1 per cent
Source: RP Data
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