Sydney and Melbourne are two of Australia's biggest cities each with population no less than 4 million, according to geonames.org.
It is normal to expect home values to rise in these two cities especially for Sydney, which is considered the number one biggest city in Australia which besides being the home of the great Sydney opera house, boasts of the world's most spectacular harbors. In a more recent report, however, Sydney's house prices are falling while house prices in Melbourne are going up.
According to the Domain House Price Report for the quarter ending December 2015, the median prices in Victoria's capital have risen 1.8 percent. Surprisingly, Sydney saw the biggest drop in home prices at 3.1 percent. Furthermore, Domain Group's Chief Economist Dr. Andrew Wilson expects that Melbourne's growth will outdo Sydney in 2016 by 2 to 5 percent.
What is more surprising is that fact that despite of the same factors, such as low interest rates and environments, Sydney saw prices drop while Melbourne's home prices soar. So what could be the reason for this?
One of the reasons is the sudden decrease in the number of investors in Sydney. It was the influx of investors in the previous months that has pushed prices earlier in 2015. Melbourne did not witness the same level of investor activity. Meanwhile, Dr. Wilson also believes that another possible reason Sydney's high prices that has driven homebuyer away. According to Domain, the median house price in Sydney is more than $1 million, whereas it's only a little over $700,000 in Melbourne.
"Sydney's certainly a lot more expensive than Melbourne and incomes aren't that different," Dr. Wilson said. Then he pointed out the four-bedroom home at 42 Longhurst Street, Oran Park as an example. The price range is between $790,000 and $820,000 but a similar house at Lot 604 Mandurah Crescent, Melton costs only $363,900.
