Melbourne gets relegated on property ladder as Gold Coast jumps

Melbourne’s property problems increasingly look permanent, while the Gold Coast has jumped up the property ladder, according to a new report.

Melbourne has dropped from second to sixth place on the national property ladder, according to a Ray White report. Picture: Getty Images

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Melbourne has been permanently relegated on the national property ladder, says a new report, which suggests a transformation in the coastal Queensland residential market has allowed the Gold Coast to switch places with the Victorian capital.

An examination of house price data over the past six years has led the Ray White group to declare “the established order of Australian property has changed dramatically”.

According to the report, Australia’s traditional property pecking order – with Sydney first and Melbourne second – is no longer valid: Melbourne has plunged to a lowly sixth place on the national ladder as the Gold Coast jumped from fourth to second.

Despite recent attention from bargain-hunting interstate investors, Ray White chief economist Nerida Conisbee says: “It’s an enduring change to the landscape and I can’t see a Melbourne rebound happening in the short term.”

Aerial view Scene of Gold Coast Beach behind around Surfers Paradise skyline, Broadbeach and Main Beach with luxury Hotel and Apartment when sunrise time at Gold Coast, Queensland, Australia, Tourist and Travel Destination concept"

Conisbee said she believed the big switch came during Covid, and the shift towards Queensland coastal suburbs at that time has never reversed, partly due to changing work patterns.

“If you go back a decade, things have really changed – if someone was planning to go to the Gold Coast, back then, they had pretty limited options – but the job market has really changed – Victoria has the highest unemployment rate now,” she says.

Meanwhile, Melbourne’s slide on the property ladder has occurred under a state government that has piled up debt while continually increasing taxes based on property: “It’s just not a great state to invest … because of the high tax rates,” Conisbee says.

Victoria’s new state debt numbers show the state to be facing a serious challenge: S&P Global shows Victorian debt will soon be 400 per cent higher than pre-pandemic levels – and ranks as the highest in the nation.

The contrasting fortunes of the two states has resulted in a similar divergence in property taxes: Victoria has introduced 10 separate property-related taxes while Queensland taxes are lower. As property commentator Michael Yardney told The Australian earlier this year: “Queensland’s lower tax policies are a significant draw.”

The tax-free land threshold in Queensland is $600,000, but just $50,000 in Victoria.

Meanwhile, the latest property numbers show Melbourne price patterns remains weak.

Figures for national prices released by the Cotality group confirm the pattern of Melbourne failing to keep pace: Over the month of June, Brisbane prices rose 0.7 per cent, Melbourne prices by 0.5 per cent. Over the past year Brisbane prices were 7 per cent higher against a decline of 0.4 per cent for Melbourne.

“I think once these current issues are resolved in Victoria – which could take some time – the growth will return and it will drive prices up again,” Conisbee says.

However, the Ray White group report found the new data “challenges decades of conventional assumptions about where Australians want to live”.

James Kirby hosts the twice-weekly Money Puzzle podcast