Melbourne's housing market has experienced a significant shift in recent years, with its median dwelling value now ranking sixth-lowest among Australia's capital cities, according to a leading property analyst.

CoreLogic Australia Research Director, Tim Lawless, said Melbourne's median dwelling value, at $776,000, now trails several other capitals.

"At the onset of COVID in March 2020, Sydney had the highest median dwelling value, followed by Melbourne, the ACT and Brisbane," Mr Lawless said. "Fast forward to August 2024, and Melbourne's median dwelling value is ranked sixth-lowest across the eight capital cities, after Darwin ($504k) and Hobart ($655k)."

Mr. Lawless said that the gap between Sydney and Melbourne's median dwelling values has widened considerably. "The difference between Sydney and Melbourne's median dwelling value is now 52.1 per cent, the largest differential between Australia's two largest capitals since June 1999," he said.

According to Mr Lawless, several factors have contributed to this shift, including demographic patterns and new housing supply. "Victoria saw far more dwelling completions than any other state or territory in the past decade," he said.

"Additionally, marked differences in net interstate migration trends, where strict, extended social distancing restrictions were a 'push' factor from Melbourne, while Brisbane, Perth and Adelaide likely benefitted from Melbourne departures."

Mr Lawless also highlighted the role of housing composition in influencing median dwelling values. "A key factor in the median dwelling value of Perth and Adelaide overtaking Melbourne is the underlying mix of housing types," he said.

"In August, CoreLogic estimates a third (33 per cent) of housing stock in Melbourne falls within the multi-unit sector, compared with 16 per cent of housing stock in Adelaide and Perth." Looking ahead, Mr Lawless suggested that Perth and Adelaide may see increased focus on higher-density housing.

"As affordability becomes more stretched and state governments shy away from the expense associated with sprawling infrastructure commitments, we are likely to see some renewed focus on establishing higher densities in Perth and Adelaide," he said.