Now that Brisbane is pricier than Melbourne, will people stop moving north?

House prices in Brisbane have shot up by 74 per cent since the start of the pandemic, the PropTrack Home Price Index shows

There has been a persistent flow of people moving to Queensland from southern states, in part to take advantage of more favourable housing affordability. But with home prices in Brisbane now exceeding those in Melbourne, will the number of people moving north start to slow?

Since the pandemic, housing markets in regional areas and smaller capital cities have outperformed. Adelaide and Brisbane experienced rapid home price growth from late 2020, and Perth prices have bounded ahead over the past 18 months.

The PropTrack Home Price Index shows Brisbane homes prices have increased 74 per cent since the start of the pandemic – but during the same period, Melbourne prices increased just 15 per cent.

This has upset the traditional ordering of city home values. Brisbane homes are now selling for more than those in Melbourne, while Adelaide – long the cheapest major capital city – is neck and neck. Sydney remains the most expensive capital city, a position it has held for most of the past three decades.

Paul Ryan

Brisbane homes have sold for more than those in Melbourne before – but it was way back in 2009. Another way to look at this is by comparing relative prices over time.

Leading into the pandemic, Brisbane homes were relatively cheap compared to those in Sydney and Melbourne. On this measure, this was the most affordable Brisbane homes had been since 2004.

For those moving to Queensland, the ability to buy a home (or a big enough home for their family) was commonly cited as a motivation for making the move north, along with the weather.

But with homes in Brisbane no longer as appealing from an affordability perspective, will fewer people move north?

Over the past few decades, there has been a persistent flow of people moving to Queensland. The southern states are a big source of arrivals into the Sunshine State. In 2023, more than 50,000 people moved from NSW to Queensland and close to 28,000 moved from Victoria.

As a share of population, more people move to Queensland from NSW than Victoria. This is partly due to the shorter distance between the two states, but is also due to cultural similarities, such as the popularity of rugby league rather than AFL.

There was a big boost to the number of people moving to Queensland throughout the pandemic. To some extent, this reflected changing lifestyle preferences and a more widespread ability to work remotely. But it also reflected the ability to buy a home – particularly a house – which may have been out of reach with Sydney and Melbourne prices.

Moves from NSW and Victoria to Queensland are tightly linked to home price differences between the states. But what is the causality of this relationship? Are more people moving to take advantage of cheaper homes in Queensland? Or are they moving for other reasons (such as job opportunities), which subsequently pushes up prices?

Both effects are likely to be important here, but the data suggests people movements follow differences in home prices. That is, prices in Brisbane keep increasing before the number of people moving there start to slow.

This makes sense given the time it takes to plan an interstate move – people are likely to make a decision to move, taking in home prices as one factor, well before the actual move takes place.

But it suggests affordable homes are a key driver of migration to Queensland.

The large run-up in prices in Queensland over the past four years has reduced the appeal of moving there. Migration to Queensland from NSW and Victoria won’t stop, but the historical relationship suggests a continued slowing.

In turn, fewer people moving north, along with challenged affordability, are reasons we expect home price growth to slow in Brisbane over the next year.

Paul Ryan is a senior economist at REA Group.