Will capital city differentials remain roughy the same for the foreseeable future?

Discussion in 'Property Market Economics' started by jerrybee, 19th May, 2015.

  1. jerrybee

    jerrybee Member

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    E.g. When comparing their positions in the cycle like for like (so not Sydney post-boom and Brisbane pre-boom), Melbourne is generally 90% of Sydney prices, Brisbane is 75% of Sydney etc. (numbers aren't correct as I don't have them on me right now but you get my point).

    Do you see this general ratio holding true for the medium to longer terms? What would it take for there to be a significant and sustainable change in the differential?

    My thoughts - they will remain roughly the same. If I'm not mistaken, the only significant change in recent memory was Perth due to the mining boom. Although one could argue whether this will remain for the longer term. The Perth anomaly aside, it almost seems like things are going like clockwork - Sydney boomed, then Melboune, and now we're seeing movement in Brisbane. So basically, what would it take for this cycle / balance to change in a meaningful way?

    Would appreciate your thoughts on this.
     
  2. Deltaberry

    Deltaberry Member

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    I think the Melbourne-Sydney gap is too wide at the moment. One will give, most likely a flatlining in Sydney and a real boom in Melbourne.

    Brisbane would be a few years later. Main problem with Brisbane is, people don't understand the new market dynamics. It's no longer driven by traditional investors we saw in the 80s or early 2000s, but by overseas buyers. Brisbane doesn't register on the radar. Most wouldn't know what it is.
     
  3. jerrybee

    jerrybee Member

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    Yes good point. But don't most of these overseas buyers operate at the top end? (2-3-4-10 million regions)?
     
  4. unloadmymind

    unloadmymind Member

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    If you're not living in Sydney, you're camping out. ;)

    Sydney has the strongest economy among Capital cities and expected ro continue.

    Melbourne? Where are the jobs, investments and infrastructure spending? Not mich.
     
  5. hugh72

    hugh72 Member

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    Although its not a capital city the biggest change would have to be the growth of the Gold Coast from a population of 33000 in the early 1960's to nearly 600000 today. Thats impressive growth and along with Canberra it is one of the few 'new' cities to emerge.
    Median house prices capital cities 1973:
    Sydney $27400
    Melbourne $19800
    Brisbane $17500
    Adelaide $16250
    Perth $18850
    Hobart $15200
    Canberra $26850
    After the effects of the 1974 floods by 1975 Brisbane was cheaper than all other Capital cities including Hobart, by 1981 it was the 3rd most expensive after Sydney and Canberra.
    In 1980 the median for Sydney was $68850 and Melbourne was 39500 significantly lower. Sydney appears to have been always the most expensive with the recent emergence of Darwin and Perth.
    The period from 1990 to 91 during the recession we had to have hurt prices in Sydney with the median dropping from 194000 in 1990 to 182000 in 1991.
    In terms of multiples Adelaide prices went from $11900 in 1971 to $33100 in 1978 incredible growth!
    Source- House Prices in Australia 1970-2003 Peter Abelson and Demi Chung
     
  6. danwatto

    danwatto and TT

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    Where in Melbourne? Are you excluding the glut of OTP bulidings under construction?

    I'd love to buy something in Melbourne as I have no land tax commitment in VIC yet, but I just can't see the value at the moment..
     
  7. Ausprop

    Ausprop Member

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    what growth drivers do you see going forward? I think it will fall back to agriculture. For Melbourne I see the closure of the car industry as being a major structural adjustment. Sydney has pretty much had its run and the next place is usually Brisbane, but the downturn in the mining industry may hamper that a bit.

    So considering all that I would expect Brisbane to close the gap a bit
     
  8. Deltaberry

    Deltaberry Member

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    Hmm so-so. They also operate at the $500k end, otherwise these apartments wouldn't be selling so quickly.
     
  9. Deltaberry

    Deltaberry Member

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    Agreed, if you weren't invested in Sydney you missed out.

    But pretty naive to say not much happenning in Melbourne. And same with Brisbane - still lots of coal mines operating and LNG facilities opening. The question is, when these miners make their money, do they go back to Brisbane or to Syd/Melb/GC? Same story in Perth. They make the money but the money doesn't stay.
     
  10. Deltaberry

    Deltaberry Member

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    Blue chip inner east and inner city is cheap compared to Box Hill and Glen Waverley.

    West is very cheap, but that's where the unemployment is.
     
  11. Deltaberry

    Deltaberry Member

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    Education is actually Melbourne's biggest export sector now. Take a stroll in the CBD at 9pm on Friday night and you'll see Brisbane is 10 years behind. I probably spend most of my time between Perth, Brisbane and Melb (occassionally Sydney) and the gap is quite big.
     
  12. willair

    willair xx

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    Depends which streets you walk down,in the Brisbane Valley compared to the central CBD,you see a vast difference from what some have to what others would like to have..
     
  13. feihong

    feihong Member

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    At the risk of getting slapped by people here, I am going to put my heads out and say, Melbourne CBD sites and Glen Waverley are the best performing suburbs of Australia in the last 2 years (yes, outperformed any suburb in Sydney even including Chatswood, Epping and Eastwood). I believe Sydney CBD sites would have outperformed both had there been any material transaction, but no Sydney CBD site land owners are willing to sell, knowing they are sitting on a pile of priceless pot of gold.

    I also do agree that inner east (and south east) that do not have renowned public schools are good value for money, much better bang for buck for anyone with 1-3M to spend compare to Box Hill and Glen Waverley.
     
  14. unloadmymind

    unloadmymind Member

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  15. jerrybee

    jerrybee Member

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    I don't know why there would be any controversy over a statement like that. If there are hard numbers to back it up then sure, maybe it was the best performing. I'm sure there must be numbers out there somewhere.
     
  16. feihong

    feihong Member

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    The danger of making a statement like that is obviously, there could be a remote area that goes up from 10K to 50K, and % wise that would perform as well as Glen Waverley and Melbourne CBD. Maybe I should amend my statement to say, outperforming any capital city suburb in Australia.
     
  17. BayView

    BayView Member

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    My feeling is that Sydney will hit a peak soon, while Melb - which is on a slow burn - will catch up a bit...

    Maybe around the middle to end of next year.
     
  18. JDP1

    JDP1 Member

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    line graphs over a time period say 30 yrs. with the capitals as each line, price on y axis and time on x axis. but, I don't know how useful it will be. It may be useful if the lines are smoothed [over the time period] but that will take out an important criteria - where in the property clock is each city. ie the lines representing each city will be lumpy and a key reason for that lumpiness is where in the property clock each city is.