Volatility in sales prices in Sydney and Melbourne, and greater stability in other State Capitals.
Rental stability across the country except for Perth.
What does this mean for employers relocating staff interstate to Sydney and Melbourne ?
In our August Client Alert we commented that Sydney and Melbourne rents have shown stability in recent years despite significant price increases. In other State Capitals sales price increases have been much lower as the table below illustrates.
Changes in the 5 years 2012 - 2017
Rent increases have been much lower than sales price increases in all State Capitals, and in Perth the impact of the end of the “resources boom” can be seen in the lower rents (on average) in 2017 than they were five years earlier.
For those considering relocation from other states into Sydney and Melbourne, buying residential property has become even harder as the table below demonstrates. For example for someone living in Adelaide and considering a move to Melbourne they have to expect to pay over 1.8 times the value of their Adelaide home for the equivalent property, and a lot more for Sydney (2.65 times).
Cost of Housing Indices
(June quarter 2017)
Over the years the proportion of employers providing financial assistance for those moving to a higher costs location has declined, and it is now uncommon. So how do employers encourage potential transferees to move ?
The answer is not clear, and indeed it is likely many employers have experienced reluctance to relocate on the part of employees located in the lower costs centre such as Brisbane, Adelaide and Perth.
The higher cost profile of Melbourne and Sydney is less dramatic in rental housing as the following table shows. For someone moving Adelaide to Melbourne the data shows they can expect to pay just 12% more for rental housing, compared with 80% more if they purchase.
Cost of Rental Housing Indices
(June quarter 2017)
This perhaps provides a financial incentive for employees to consider keeping their property in the lower costs location and renting when they relocate – something that, in the past, many employers discouraged if the move was a permanent appointment to a Head Office location as it worked against the employee and family fully embracing the new location.
Data sources: Real Estate Institute of Australia