Sydney and Melbourne are often seen as parallel powerhouses, similar in population, global presence, and economic importance. But beneath these surface similarities lies a widening gap in one critical area: residential property prices. As the data reveals, the divide is growing. So, is Melbourne now the most undervalued major city in Australia?
Sydney vs Melbourne: Same Country, Two Realities
Australia’s two largest cities, Sydney and Melbourne, are often viewed as parallel powerhouses.
Both are home to major global companies, world class infrastructure, top universities, and thriving cultural institutions.
They share similar population sizes, comparable levels of international visibility, and play equally critical roles in the national economy.
Yet, there is one area where these similarities fall apart: residential property prices.
Price Comparison: Sydney vs Melbourne (2017–2024)
Below is a comparison of median house prices in each city, based on Domain’s December House Price Reports from 2017 to 2024.
| Year | Sydney Median House Price | Melbourne Median House Price |
|---|---|---|
| 2017 | AUD 1,180,000 | AUD 904,000 |
| 2018 | AUD 1,063,000 | AUD 833,000 |
| 2019 | AUD 1,142,000 | AUD 902,000 |
| 2020 | AUD 1,211,000 | AUD 936,000 |
| 2021 | AUD 1,601,000 | AUD 1,102,000 |
| 2022 | AUD 1,414,000 | AUD 1,033,000 |
| 2023 | AUD 1,595,000 | AUD 1,047,000 |
| 2024 | AUD 1,645,000 | AUD 1,039,000 |
What the Data Tells Us
From this data, several patterns become clear:
- Over the 8 year period, Sydney’s median house price rose by AUD 465,000, an increase of 39%
- Over the same period, Melbourne’s median house price rose by AUD 135,000, or 15%
- The absolute price gap between the two cities has widened significantly:
- In 2017, the gap was AUD 276,000
- By 2024, the gap had grown to AUD 606,000
- This represents a 120% increase in the spread between the two markets
While both cities exhibit a strong year to year correlation in how prices move, supported by a Pearson correlation coefficient of 0.949, which is considered very strong, the divergence in magnitude cannot be overlooked.
This high correlation indicates that Sydney and Melbourne markets tend to move in the same direction, but not to the same degree.
The Big Question: Is the Gap Sustainable?
This leads to a central question. How sustainable is this price gap?
If the cities share comparable population size, infrastructure, global appeal, employment strength, and lifestyle quality, then one would reasonably expect long term convergence in housing values.
In that context, Melbourne may currently represent one of the most undervalued major city housing markets in the country.
What It Means for Buyers, Investors & Policymakers
For buyers, especially those priced out of Sydney, the argument for shifting focus to Melbourne becomes stronger.
For investors, Melbourne’s lower entry point and relatively slower growth in recent years may signal upside potential.
For policymakers, this divergence may point to deeper structural challenges in housing supply, land use, or planning that are driving excess premiums in one city over the other.
Of course, the story is not purely economic. Local planning regimes, migration patterns, investor preferences, and housing supply constraints all contribute to these trends.
Yet over time, such a large and sustained pricing difference between two otherwise comparable cities raises the likelihood of a longer term rebalancing, whether through Melbourne growth, Sydney stagnation, or some combination of both.
Next Step: Speak With a Strategic Property Advisor
At Rising Returns we specialise in helping investors navigate market cycles with precision.
Whether you are planning your next portfolio move, assessing property purchases, or reviewing your buyer’s agency agreement, our team can help you make the right decisions in a fast shifting market.
📞 Call us now or book a strategy session online to take advantage of this new policy landscape before competition intensifies.
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