With Australia’s two most populous cities continuing to suffer from continuous lockdowns, one thing is proving to be pandemic-proof, and we are the only other country in the world to have it.
As Australia’s two most populous cities continue to suffer from increasing numbers of cases and continued closures, one thing is proving to be essentially pandemic-proof: bricks and mortar in Sydney and Melbourne.
The new data reveals just how staggering Australia’s large real estate divide is, with the Sydney and Melbourne residential property markets individually worth more than the rest of the state and territorial capital markets combined.
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The total value of residential real estate in Sydney was worth $ 2.53 trillion at the beginning of this financial year, while Melbourne’s totaled $ 1.74 trillion, according to figures from CoreLogic.
When the market values of Brisbane, Adelaide, Perth, Canberra, Hobart and Darwin are added, they add up to a total of $ 1.694 trillion.
Total value of residential home
Sydney $ 2.53 billion
Melbourne $ 1.74 trillion
Brisbane $ 626.7 billion
Adelaide $ 307.5 billion
Perth $ 528.8 billion
Hobart $ 62.3 billion
Darwin $ 25.9 billion
Canberra $ 143 billion
In May this year, CoreLogic announced that the total value of Australian residential real estate had passed the $ 8 trillion mark for the first time to reach $ 8.1 trillion, but that number is rising rapidly, driven largely because of the high property prices in Melbourne and Sydney.
“I’m pretty sure in the next few months that’s probably going to break the $ 9 trillion mark, it’s moving so fast,” said Tim Lawless, CoreLogic’s head of research, adding that this huge disparity in home values it is almost exclusive to Australia. .
“The population is concentrated in two very large cities, which of course means that the demand for housing puts a lot of pressure on the supply. I think the crux of Sydney’s really expensive housing market is simply the mismatch between supply levels, which are generally very tight, especially in highly desirable areas, and the extreme level of demand for housing in those areas, ”Lawless said.
“However, the United States is the exact opposite. Its population is widely dispersed throughout the country. If you look at the top 200 US companies on the stock market, only a couple of them are based in high-profile cities like New York, Los Angeles, or San Francisco.
“A lot of them are based on what we would describe as regional markets, but there they tend to be more industry-based hubs like Charlotte or Seattle.”
The Demographics Group social demographer Simon Kuestenmacher agreed that Australia’s great divide in property values is unmatched globally.
“It is literally the only country in the world where we have the highest proportion of the population living in the five major cities, even more so in Sydney and Melbourne,” he said.
“That means everything is hyper-concentrated and that is why we have such large CBD, such large trade groups.”
“If you think of any European country, populations are much more evenly distributed and city centers are not that important. Partly because city centers have grown historically and there are a lot of height and construction restrictions, so these important urban markets like the ones we have in Australia are not created. ”
Mr. Kuestenmacher explained that Sydney’s popularity, and the resulting high property prices, are due to a number of factors that could be difficult to change even after Covid.
“So people can move to Sydney because it’s beautiful, but why don’t we have a population of 5 million in Byron Bay, that’s beautiful?
Or Margaret River, is that beautiful too? It’s because you have these working groups, and it so happens that in our country, the big financial groups in particular are in Sydney, so that’s where the money flows, ”he said.
“But now, with Covid, we could say that at a marginal rate we are progressing little by little towards greater price equality, but at a glacial speed.
“It is interesting to see how much more valuable Sydney is compared to Melbourne, considering that the two cities are relatively similar in size. Property values would change once Melbourne’s population overtakes Sydney, which was long predicted to happen in the late 2020s. However, now with Covid we will have to do. That change in dynamics could reduce the gap a little bit, ”he said.
The social demographer posed that the big question post-pandemic is whether or not the Covid-related trend of escaping from big cities is likely to last.
The answer could lie in why Australia’s major cities gained such a bulwark in the real estate market in the first place.
“Because so many jobs benefit from this type of CBD bundling; the kind of work where colleagues often have creative collaborative elements, these are best done in the CBD, where people meet and mingle, ”explained Mr. Kuestenmacher.
“What that means is that we are not completely free from the city because many of us will still have to go downtown, at least occasionally.
“So employees will think ‘I’m not moving to Alice Springs if my office is in Melbourne, but I could move to Ballarat.’ We are still chained to CBD, but the leash has gotten much, much longer, ”he said.
Internal migration data from Australia’s Bureau of Statistics released this month showed capital cities had a net loss of 11,800 people during the March quarter, the largest quarterly net loss on record.
Unsurprisingly, affordability is a main driver of the great smoke.
“I think Sydney will always have a premium in values over other cities, but there is plenty of evidence that change is already beginning to take place,” Lawless said.
“More people are leaving the capitals, notably Melbourne and Sydney, for regional markets and fewer people are leaving regional markets for capitals.
“People can work remotely, or at least have flexibility, so that the distance barrier doesn’t get close to the obstacle it used to be,” he said.
“A lot more people will do the numbers and find that they can afford to live quite comfortably, with lower levels of debt, outside of Sydney, but will still be able to work their jobs in the city,” Lawless said.