Property prices: poor performer likely to become a future winner

Property prices have boomed in some capital cities and shrunk or stagnated elsewhere. A straggler could be set to shine.

For a single country surrounded by sea, Australia has a lot of different housing markets.

The past few years have delivered either a huge windfall or a painful slog, depending on where you live, when it comes to home price growth.

Brisbane, Adelaide and Perth have been stunners, continually surging to new record highs, while Melbourne and Hobart have struggled. Sydney, Darwin and Canberra have climbed modestly.

Figures from PropTrack show that both Melbourne and Hobart home values are still 5-7 per cent below their March 2022 peaks, and since then prices in Brisbane, Adelaide and Perth have each jumped almost a quarter of a million bucks.

Its latest Home Price Index says Sydney dwellings continue to be the most expensive nationally at a median $1.09m, followed by Brisbane ($870,000), ACT ($834,000), Adelaide ($793,000), Melbourne ($774,000), Perth ($766,000), Hobart ($668,000) and Darwin ($509,000).

The sun could soon shine on some capital cities that have recently struggled. Picture: iStock

CoreLogic’s Home Value Index has higher medians for most, with Sydney at $1.19m, Brisbane $894,425, Canberra $846,955, Adelaide $822,201, Perth $807,933, Melbourne $772,561, Hobart $661,544 and Darwin $506,591.

These numbers are scary reading for first home buyers wanting to get a foot in the door, but good news for longer-term owners and investors whose property price growth has outpaced their wages over the past few years.

But the past is the past, and the big question is for many is what their city’s home prices will do in the next five years, and which city will perform best.

I’m betting that one particular city will shine, bouncing back after years in the doldrums. Come on down … Melbourne!

I reckon the price is right in Melbourne for a huge game of catch-up by 2030. It has historically been the nation’s second-best performer over many decades but has recently been leapfrogged by multiple smaller cities.

Experts have listed several reason’s for Melbourne’s poor property performance in recent years, including investors fleeing the market amid anti-landlord state government policies, tenant-friendly reforms, its long Covid lockdowns weakening the Victorian economy, and a high-taxing government that has lost the confidence of many of its people.

These factors have dented its property market, but it shouldn’t be a long-term drain to the extent that most capital city home values continue to eclipse Melbourne.

There have been signs of a turnaround beginning, as investors start to spot a bargain – seeing the mismatch in prices and the likelihood that Brisbane, Adelaide and Perth cannot continue their barnstorming runs indefinitely.

Respected property specialist and adviser Michael Yardney says the situation in Melbourne today is similar to where Perth and Brisbane were three years ago. And look what they’ve done since 2022 – a quarter of a million dollars of median home price growth.

Australia’s real estate sector moves in state-based cycles, and right now some cities are at the top and some at the bottom.

There may be federal election promises and pledges that will impact real estate, but any effects from those will likely be national.

Whatever happens on the federal front, buying real estate in Melbourne looks to me to have better growth potential than other Aussie capitals.

Originally published as Property prices: poor performer likely to become a future winner