House prices in Sydney and Melbourne are among the highest in Australia, both in regard to the price levels, as well as the volatility of growth rate. It is not rare to see the media reporting a record sale price is made in the blue-chip suburbs such as Vaucluse, Bellevue Hill, Bronte and Bondi year after year.
In this article, we compare the performance of blue-chip suburbs in Brisbane against Sydney. Brisbane is the third-largest economy in Australia, which has a diverse economy, strong economic fundamentals, and modern infrastructure. However, the house prices in Brisbane remain significantly lower than in Sydney and Melbourne in both blue-chip and mass markets.
We investigated the dynamics of price changes and price levels in the last 20 years between Sydney and Melbourne, focusing on the blue-chip suburbs.
The results will inform our investment strategies in the Brisbane market, as well as across Australia, especially for those who are priced out of the Sydney and Melbourne blue-chip suburbs wanting to consider Brisbane as a replacement without compromise on potential price growth.
The methods:
We identified a list of relevant comparable blue-chip suburbs in Brisbane and Sydney
We collected the prices in 2000 and 2021, from which the accumulated growth is calculated
We compared the two groups of suburbs based on: housing prices and other suburb level indicators.
Findings:
Houses: The ratio of Sydney’s prices vs. Brisbane’s prices was 4:1 in 2000 and 3.8:1 in 2021, which remained broadly unchanged over the course of 20 years. This suggests that there is a strong correlation in the price trends between the blue-chip suburbs between Sydney and Brisbane.
Units: The ratio of Sydney’s prices vs. Brisbane’s prices was 2.2:1 in 2000 and 2.9:1 in 2021, which indicates the prices in Sydney outperformed that of Brisbane.
In Sydney, the prices of houses increased faster than the prices of units by 1.6 times;
In Brisbane, the prices of houses increased faster than the prices of units by 2.8 times.
In examining the housing and demographic factors, we find that household income, % of professionals and managers, median mortgage repayment and rent are higher in Sydney than in Brisbane.
In addition to the differences in the housing and demographic factors, the gap between Sydney and Brisbane prices could be explained by the differences in the economy size, where NSW’s GDP is $630 billion, while Queensland’s GDP is $360 billion. There are likely more highly paid professionals, large companies and a larger share of affluent migrants in Sydney than in Brisbane, which partly drives up the housing values in Sydney, in comparison to Brisbane.
In summary, there is a gap in price level between Brisbane and Sydney, however, houses in blue chip suburbs in Brisbane are predicted to perform as good as in Sydney, which offers great opportunities for investors who are looking for A grade assets at more affordable prices.
Given a large price gap between Sydney and Brisbane, coupled with significant infrastructure investment for the 2032 Olympic Games, we predict the demand for premium properties is expected to take force in the future as the city will emerge to be one of Australia’s global cities.
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