How Sydney’s lack of housing supply makes it so much more expensive to live in than

Tasked with finding a new place to live, Sydney woman Alexandra Koster weighed up her renting options, and made the move down to Melbourne.

“I was thinking realistically about renting in Sydney, and outside of some very specific places further out … I probably couldn’t afford [what I wanted],” she said.

The 31-year-old is now settled in a spacious inner-city North Fitzroy share house, for about $300 a week, and said the money wouldn’t go as far for a central location back home.

“The difference in rent was nuts,” she said about her house-hunt last month.

“I don’t think I would be able to afford a room like that in Sydney.”

While Sydney and Melbourne are often pitted against each other for cultural supremacy, the two cities are clearly divided by one major factor.

According to data from Finder this year, Sydney is 22 per cent more expensive to live in than Melbourne.

Additional statistics show housing supply issues to be a key factor driving up Sydney prices.

Interstate removalists Muval reported Melbourne drew the most metro inbound moving enquiries from their clientele this year.

Meanwhile their latest data showed Sydney held the most outbound requests in September, with almost one in three metro requests leaving the Harbour City.

But are rent and mortgages becoming the main draw for people making the interstate move, and does it also stack up for other cost of living areas?

Buying a house

There is a “massive gap” in price between the typical dwelling in Sydney and Melbourne, according to CoreLogic’s head of research Eliza Owen.

As of November this year, their data showed the average value discrepancy is sitting at a record high of $345,000.

The biggest reason for this is supply.

“The gap in completions across Victoria versus NSW, has widened over time,” Ms Owen said.

Premier Chris Minns recently announced a major housing development to replace Rosehill Racecourse, saying Sydney had the lowest rate of dwelling completions in the country.

“We produce six houses per 1,000 people every 12 months in Sydney, Victoria produces eight, and Queensland produces nine,” he said. 

In the past 15 years, there were about 21 per cent more dwellings completed across Victoria, than NSW, Ms Owen said. 

According to PropTrack senior economist Eleanor Creagh, Sydney house prices over the past year grew 8.4 per cent, compared to Melbourne’s 1.39 per cent. 

The rental market