This week we look at the dwelling value premium for Sydney compared to the other capital cities over time.

With a median dwelling value of $904,041 in November 2017, Sydney is the nation’s most expensive capital city housing market, despite the recent moderate declines.  In fact, if we look historically Sydney has, outside of a short period in 2006 and 2007 consistently been the most expensive housing market.

It is a valuable exercise to look at how over time Sydney’s premium relative to the other capital city markets has cycled.  The accompanying charts show the Sydney premium over time with the red line highlighting the average premium over the length of the period shown on each chart.

Melbourne

Dwelling values currently sit at $718,325 indicating that Sydney values are 25.9% higher.  The Sydney premium is currently the lowest it has been since April 2014. Over the long-term Sydney’s average premium has been 39.2%.

Brisbane

With a median dwelling value of $490,915, Sydney dwellings are currently 84.2% more expensive than Brisbane’s.  The long-term average premium is 54.1% and the premium has consistently been higher than this average since September 2014.

Adelaide

Sydney dwelling values have, on average, been 180.3% higher than Adelaide’s.  Adelaide’s current median dwelling value of $432,126 sees the Sydney premium at 109.2%.  Sydney has had an above average premium to Adelaide consistently since November 2014.

Perth

The current median dwelling values for the city is recorded at $463,026 which indicates that Sydney’s current median is 95.2% higher compared to a long-term average difference of 60.8%.  The premium for Sydney housing has been above the long-term average since August 2015.

Hobart

With a median dwelling value of $398,093, Sydney’s median value is currently 127.1% higher.  The long-term average Sydney premium is 105.0% indicating that the gap has been wider than average since December 2013.

Darwin

Sydney dwellings are currently 108.9% more expensive than Darwin’s median dwelling value which sits at $432,774.  Over the long-term the average premium for Sydney dwellings has been recorded at 54.9% with the premium consistently above the long-term average since June 2015.

Canberra

The median dwelling value currently sits at $588,788 which means that Sydney has a value premium of 53.5%.  The long-term average premium for Sydney is 33.2% with the premium having been above average consistently since April 2014.

Just because the Sydney premium is currently above the long-term average for most cities doesn’t necessarily mean that we will see a reversion to those long term averages.  In stating this, dwelling values are beginning to fall in Sydney after a substantial increase over recent years.  Assuming these falls continue, the premium relative to the other capital cities is likely to decline.

Across most capital cities the current Sydney dwelling value premium is similarly large to what it was late in 2002 after a significant period of growth for the city.  Following that growth phase, Sydney values peaked in December 2002 and then fell by 8.2% and didn’t eclipse the previous peak until October 2007.  It is reasonable that we could see similar falls over the coming year(s) which would in-turn narrow the gap between the value of housing in other capital cities relative to Sydney.
 

Cameron Kusher
Senior Researcher at CoreLogic

_{Published: 12 December 2017.}