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Hello Melbourne, Move Over Sydney

Melbourne could be Australia’s next biggest city by 2031 if growth trends continue (Photo: Leigh Hennigham)

Right now Sydney is Australia’s largest city, but this may no longer be true by 2031 if current growth trends continue.

According to demographer Bernard Salt, if Melbourne maintains its current growth rate, its population will surpass that of Sydney by 2031, well ahead of previous estimates.

Historically, the population of Melbourne once exceeded Sydney’s back in the gold rush-inspired 1850s. By the time of Federation — the establishment of the Commonwealth of Australia — both cities were about the same size at half a million people each.

However, at the end of the 20th century, it was Sydney that took the lead with close to 4 million people, higher than Melbourne by about 600,000.

Sydney’s current lead is close to 350,000 but it is losing ground at a rate of 20,000 a year.

The difference in population between Sydney and Melbourne (The Australian)
The difference in population between Sydney and Melbourne (The Australian)

Why is Melbourne attracting more growth than Sydney?

According to Mr Salt, Melbourne offers what Sydney cannot or is inclined not to offer — access to affordable housing on the urban fringes. Where the price for a house and land package on the fringes starts with the number three in Melbourne, Sydney’s more distant equivalent starts with a five.

Mr Salt added that it was the policies — Sydney’s “full” and Melbourne at 2030 — which changed the long-term fortunes of both cities.

Bob Carr, Labour premier and environmentalist, declared Sydney full in 2000. This led his government not to invest enough in infrastructure to accommodate expansion. Melbourne, on the other hand, planned for growth under Jeffrey Kennett’s government in the 90s, forming a plan for 5 million residents by 2030.

This plan opened up the Melbourne’s west region to new development and was the beginning of its transformation. Within a decade, the Gold Coast lost its place as the nation’s fastest-growing region to Melbourne’s west.

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In November 2007, census ­results confirmed that Melbourne was closing the gap on Australia’s previously untouchable Emerald City. This trend has continued, and the last figures released by the Australian Bureau of Statistics showed that Melbourne added a record-breaking 108,000 residents whilst Sydney added just 83,000 — in the year to June 2016.

The housing and jobseeker market most readily gravitates to cities that deliver housing affordability combined with access to a capital city job market. And that is precisely what Melbourne is doing better than Sydney in the 21st century.

Whilst Sydney’s house prices continue to fall, Melbourne’s housing remains in demand. In the year to April 2018 house prices in Sydney have dropped by about 2.1%, whilst Melbourne has managed a healthy 5.3% increase.

The Future of Melbourne

As Melbourne continues to grow, it will reach an estimated 8 million residents by the early 2050s. More development of housing and infrastructure will be needed in order to keep pace with the city’s booming population.

Melbourne City Council has already submitted a proposal for two more underground rail tunnels by 2035 to cope with exploding population growth. The proposal also includes its trams having road and traffic light priority throughout the city – as in Zurich – to cope with the demand. An extra 116,000 people are expected to take trains into the city in the morning peak by 2031, which is almost double the present number.

The two proposed Metro Lines (1 & 2), with Metro 3 - a second airport rail line linking to Southern Cross (The Age)
The two proposed rail tunnels (Metro 1 & 2), with another – Metro 3 – a second airport rail line linking to Southern Cross (The Age)

Property group Stockland has recently announced plans to deliver more than 1,600 homes in the Melbourne suburb of Truganina. The $540 million residential project will be less than 30 kilometres from the CBD, and will span a 138-hectare area, comprising a community activity centre, local parks, town centre, primary school and a 54-hectare conservation zone.

For those that would rather live closer to the city, and have less need for a house and land package, Melbourne’s prime CBD zone is where it’s at. There have been several new luxury apartment developments in the CBD, one of them being the strategically-located Palladium Tower, which achieved an amazing 98 out of 100 walk score!

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With a full host of amenities and a Woolworths supermarket on the ground floor, it offers luxury living right within reach of everything Melbourne has to offer. The Crown Casino is right opposite, and 2 tram lines on both sides lead into the CBD near the Free Tram Zone. The development is fully FIRB approved, and commands a high rental yield with an average of around 5.2%.

Article by Ian Choong


CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

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