Melbourne has been named the cheapest major city in the country by the world index | Oliver Hume
Australia’s housing market is moving at a different pace, with Perth heating up while Melbourne’s recovery is lagging, according to a new national analysis.
Australia’s property boom is bifurcating, with Melbourne now the cheapest major city in the country to buy land as Perth continues to red-hot.
New analysis from the Oliver Hume Land Index shows four of the world’s five largest land markets are now on fire, highlighting Australia’s housing affordability imbalance.
The data shows that Perth remains the hottest property market in the country, while Melbourne is the only major capital city yet to fully recover.
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Oliver Hume chief economist Matt Bell said the global market was doing very well although there were clear differences between individual cities.
“On a national level, global markets are doing well,” Mr Bell said.
“At the end of last year most markets, four out of five, were operating above that equilibrium level.
“Melbourne is the only one below that level but it is moving up to it.”
Melbourne remains the only major housing market to perform below normal levels, although analysts say pent-up demand is starting to pick up. Photo: Tony Gough
Mr Bell said Perth had been a nationally prominent market for a number of years.
“I’m coming to the hottest market in the country, which has been going on for a few years now,” he said.
“That shows very strong demand relative to supply.”
Mr Bell said strong supply was also creating conditions in other parts of the country, particularly in Southeast Queensland and Adelaide.
“Southeast Queensland is a market where that tight supply is holding back capacity,” he said.
“So prices are not historically strong, but the demand is there, and that is reflected in the price growth.”
Strong consumer demand and limited housing supply continue to drive up property prices across several Australian states. Photo: Jake Nowakowski
Strong housing supply is helping to drive strong prices across south-east Queensland despite land purchase prices remaining subdued. Photo: Nigel Hallett
“Adelaide is a market that has been constrained for a long time, so we haven’t seen a lot of movement in volumes, but like Queensland, international prices are very active.”
Mr Bell said that markets that remain hot for a long time tend to return to moderate conditions.
“Markets can go hot and, to be honest, the longer you take that hot level, the closer you are to some kind of reduction or return to a moderate and moderate level,” he said.
“We are still very optimistic about 2026. We are not predicting any significant gains this year, but eventually markets like Perth, which are hot, will have to soften.”
Oliver Hume chief executive Julian Coppini says Melbourne has gone from one of the most expensive housing markets in Australia to one of the cheapest.
Oliver Hume chief executive Julian Coppini said the index also highlighted how Melbourne’s position in the national market had changed.
“Five years ago Melbourne was the most expensive city, or the second most expensive city in Australia,” Mr Coppini said.
“Now it’s much cheaper.”
The change is starting to attract new attention from buyers and value investors.
PIPA chair Cate Bakos says Melbourne’s relative affordability is attracting renewed interest from regional buyers and value-seeking investors.
PIPA chair Cate Bakos said Melbourne’s limited accessibility was already generating strong interest from interstate buyers.
“There is no doubt that Melbourne currently represents a strong value in the country,” said Ms Bakos.
“In fact, in the last year I have received more interstate inquiries than I did in the last few years.”
Ms. Bakos said that investors are more focused on houses and not houses, especially in the lower and middle areas of the market.
“A lot of the research is focused on houses in the lower and middle areas of the market,” she said.
REIA president Jacob Caine says Australia’s housing markets are moving at a different pace due to supply shortages, population growth and policy implications.
REIA president Jacob Caine said the downturn in Australia’s property market showed the national housing recovery was unlikely to slow.
“Different markets respond to different pressures,” Mr Caine said.
“In some states strong population growth and limited supply are driving up prices, while in others affordability and policy settings are influencing investor behavior.”
Mr Caine said the national story is increasingly being defined by markets moving at different speeds.
“The national issue is not one market moving together,” he said.
“Many markets move at different speeds depending on local supply, demand and economic conditions.”
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