Which Australia cities show the best long-term growth?

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How has population growth shaped Australia's major cities over the past 20 years?

Australia's major cities have experienced dramatic population expansion over the past two decades, with some cities nearly doubling in size.

Perth leads the growth race with a 53% population increase, now housing over 2.38 million residents. Brisbane follows closely with 52% growth, reaching almost 2.8 million people. Sydney added 1.29 million residents (31% growth), while Melbourne has maintained consistent expansion with 142,600 new residents in the last year alone, bringing its total to 5.35 million.

Adelaide showed the most modest growth at 23%, reaching nearly 1.47 million residents. The smaller capitals - Canberra, Hobart, and Darwin - also experienced steady increases, though at more manageable rates. This growth pattern reflects Australia's urbanization trend, with most new residents choosing to settle in the major metropolitan areas.

As of September 2025, Australian capitals collectively added 427,800 people in the previous year, with net overseas migration being the primary driver of this expansion.

What do official projections say about future population growth in these cities?

Government projections paint a picture of continued robust expansion across Australia's major metropolitan areas through 2041.

Melbourne is expected to add 1.6 million new residents by 2041, making it potentially Australia's largest city. Sydney will likely gain 1.2 million people, while Brisbane and Perth are each projected to grow by approximately 975,000 residents. Adelaide and the smaller capitals will see more modest but steady increases.

Approximately two-thirds of Australia's new residents will settle in Sydney, Melbourne, Brisbane, and Perth, creating sustained housing demand in these markets. These projections assume continued international migration and interstate movement patterns, with climate, employment opportunities, and lifestyle factors driving location choices.

The total national population is expected to require about 2 million additional dwellings in the largest cities by 2041 to accommodate this growth, representing a massive opportunity for property developers and investors.

How have house prices in these cities performed compared to the national average?

Australian capital city house prices have dramatically outperformed inflation and income growth over the past two decades, with most cities seeing prices quadruple or more.

Five out of eight capital cities now have median house prices exceeding $1 million, with the national average sitting at $1,002,500 as of September 2025. Brisbane and Adelaide have shown particularly strong acceleration in recent years, while Perth is experiencing a catch-up phase after several years of subdued growth.

What does the housing demand versus supply situation look like for the next decade?

Australia faces a significant housing supply shortage that will likely worsen before improving, creating sustained upward pressure on property prices and rents.

The projected population growth of 7.4 million people will require approximately 2 million additional dwellings in the largest cities by 2041. However, current construction pipelines fall well short of meeting this demand. Government housing targets call for 1.2 million new homes by 2034, but projections suggest only about 938,000 will actually be completed.

This leaves a supply shortfall of over 260,000 homes, with annual housing completions needing to reach at least 205,000 to balance demand and ease rental pressures. Currently, most cities are delivering far below these required levels, particularly in the affordable housing segment.

The supply-demand imbalance is most acute in Sydney and Melbourne, where land constraints and planning delays compound the problem. Brisbane and Perth have more development capacity but still struggle to keep pace with population growth.

It's something we develop in our Australia property pack.

How do current rental yields and vacancy rates compare across these cities?

Rental market conditions vary significantly across Australian cities, with northern and smaller capitals offering better yields while the major southern cities favor capital growth over income returns.

Darwin leads with rental yields of 6.6% overall, followed by Hobart at 4.4% and Perth at 4.3%. The larger cities - Sydney (3.1%), Melbourne (3.7%), and Brisbane (3.7%) - offer lower yields but typically stronger capital growth prospects. Units consistently outperform houses for rental yields across all markets.

Vacancy rates remain extremely tight across most cities, with Perth and Brisbane showing particularly strong landlord conditions at 0.7% and 0.9% respectively. Hobart has the lowest vacancy rate at 0.6%, while Canberra has the highest at 1.6%, though this still represents a relatively tight market.

These low vacancy rates indicate strong rental demand and limited available stock, supporting both rental growth and property values across all major markets. Investors can expect continued rental increases in most cities through 2025 and beyond.

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Which cities are attracting the highest levels of interstate and international migration?

Migration patterns reveal distinct preferences, with Queensland and Western Australia emerging as the top destinations for interstate moves, while New South Wales continues to attract the most international migrants.

Queensland recorded the largest net gain from interstate migration with +32,625 people in 2023, primarily driven by lifestyle factors, affordability, and climate preferences. Western Australia also shows strong migration growth, with regional areas often outperforming the capital cities. Melbourne currently stands as the only capital with a net positive inbound migration ratio in 2025.

Sydney and New South Wales experience significant outbound interstate migration as residents seek more affordable options, but this is offset by the largest international migration intake. This creates a unique dynamic where Sydney maintains population growth through international arrivals while losing residents to other states.

International migrants typically choose Sydney and Melbourne first due to employment opportunities and established communities, but many later relocate to Brisbane, Perth, or Adelaide for lifestyle and affordability reasons. This two-stage migration pattern supports demand across multiple cities.

What major infrastructure projects will boost long-term growth in each city?

Every major Australian city has significant infrastructure investments underway or planned, designed to improve connectivity, housing accessibility, and economic competitiveness.

Sydney's WestConnex and Metro rail projects will transform western suburbs accessibility, while Melbourne's suburban rail loop and airport rail link will connect previously isolated areas to the CBD. Brisbane's Cross River Rail project and Olympic preparations for 2032 represent massive infrastructure upgrades that will reshape the city's connectivity.

Perth benefits from major mining-related infrastructure and port expansions, while Adelaide focuses on renewable energy hubs and health precinct developments. Canberra continues expanding its light rail network, and Hobart invests in tourism and arts infrastructure.

These projects typically create property value uplift in surrounding areas, improve rental demand through better connectivity, and support long-term economic growth. Areas near new transport links often see 10-20% property value increases within 2-3 years of completion.

How do employment trends and income growth differ across these cities?

Employment markets vary significantly across Australian cities, with each developing distinct economic strengths that support different types of property investment strategies.

Sydney and Melbourne dominate job creation in finance, technology, business services, and education sectors, offering the highest average incomes but also the highest living costs. These cities attract professionals willing to pay premium prices for proximity to career opportunities.

Brisbane and Perth benefit from resources, logistics, tourism, and construction sectors, with strong employment rates and growing professional services. These markets offer better income-to-property-price ratios than Sydney or Melbourne. Adelaide, Hobart, and Canberra maintain stable public sector and healthcare employment bases, with steady but slower income growth compared to the largest cities.

Job creation rates directly correlate with housing demand, making employment trends a reliable indicator of future property market performance in each city.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

Which industries dominate each city and how stable are these sectors?

Each Australian city has developed distinct economic specializations that provide varying levels of stability and growth potential for property investors.

Sydney's economy centers on finance, technology, construction, and tourism - all stable and expanding sectors that support high property values. Melbourne leads in education, healthcare, manufacturing, and creative industries, providing diverse economic resilience. Brisbane and Perth benefit from mining, logistics, construction, and hospitality sectors, which can be cyclical but currently show strong performance.

Adelaide focuses on health, aged care, and manufacturing, offering stability but slower growth. Canberra's economy revolves around public administration, education, and defense - highly stable sectors that provide consistent property demand. Darwin and Hobart have smaller, more specialized economies but benefit from unique lifestyle attractions.

Cities with diversified economies (Sydney, Melbourne) tend to show more stable property markets, while resource-dependent cities (Perth, Brisbane) can experience higher volatility but also stronger boom periods. Understanding these economic bases helps predict long-term property performance.

How do affordability metrics compare between Australia's major cities?

Housing affordability varies dramatically across Australian cities, with price-to-income ratios ranging from challenging to severely stretched depending on location.

Sydney's price-to-income ratio exceeding 13:1 places it among the world's most unaffordable cities, while Adelaide and Perth offer the best affordability among major capitals. National affordability has deteriorated significantly, particularly limiting first-home buyer access in the largest markets.

Which cities have the most supportive government policies for property development?

Government housing policies vary significantly across states, with some cities implementing aggressive supply-side measures while others focus on demand management.

Victoria and New South Wales have set the most ambitious targets for affordable and social housing, with streamlined planning approvals and developer incentives. Victoria aims for significant social housing expansion, while NSW focuses on housing supply acceleration through planning reforms.

Queensland, Western Australia, and South Australia offer various supply incentives and first-home buyer assistance, though delivery often lags behind demand growth. The Federal Housing Accord targets 1.2 million new homes nationally by 2034, but current supply pipelines suggest this goal will be challenging to achieve.

Cities with more supportive development policies typically see stronger construction activity and more diverse housing options, though planning approval timeframes remain a challenge across all markets.

It's something we develop in our Australia property pack.

How do lifestyle factors influence long-term growth patterns in these cities?

Climate, education quality, and lifestyle amenities increasingly drive migration decisions, creating distinct competitive advantages for different cities.

Brisbane leads in climate-driven migration, offering subtropical weather, outdoor lifestyle options, and lower living costs compared to Sydney and Melbourne. Perth attracts residents with its Mediterranean climate, beaches, and mining-sector opportunities, while maintaining reasonable affordability levels.

Sydney and Melbourne continue to draw residents seeking world-class education, cultural amenities, and international business connections, despite high costs. Adelaide, Hobart, and Canberra appeal to families prioritizing affordability, education quality, and work-life balance over maximum career opportunities.

Educational infrastructure, healthcare facilities, and recreational amenities directly impact long-term property demand, with areas near top schools and universities maintaining premium valuations. Climate considerations are becoming more important as remote work enables location flexibility for many professionals.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Propertyology - 30 Fastest Growing Australian Cities
2. Australian Bureau of Statistics - Capital Cities Continue Strong Growth
3. Prime Capital - Population Boom to Fuel Demand
4. Centre for Population - Capital Cities Population Projections
5. Aussie Home Loans - 25 Years Report
6. Finni - Capital City 20-Year House Price Growth
7. Domain - Capital Cities Median House Prices
8. Wise - Best Rental Yield Australia
9. Property Update - Rental Vacancy Rates
10. National Housing Supply and Affordability Council - Housing System Report 2025