Melburnians take considerable pride in their hometown's 'Most Liveable City in the World' crown, but property and planning experts are warning that the title is under threat.

Expensive housing, sprawling outer suburbs without proper infrastructure, clogged freeways and packed trains are all taking their toll on Melbourne's once-enviable way of life.

Melbourne has been ranked by the Economist Intelligence Unit as the world's most liveable city for the past six years in a row, but if property trends continue on their current path Melbourne could become just as unaffordable as Sydney

According to the latest CoreLogic figures, Sydney recorded 12.4 per cent growth and Melbourne recorded 15.9 per cent growth over the past year. It's the first time Melbourne values have increased at a higher rate than Sydney's, year on year.


So what's going on?


"It wasn't really a big surprise, to be honest, because Sydney has more investors and they're being charged a lot for loans so that portion of the market is cooling slightly," says Head of Research at CoreLogic, Cameron Kusher.

While Kusher thinks people should track the Melbourne market a little longer before jumping to any conclusions, he added: "If the market continues in this direction for a few years, you still may have cheaper house prices in Melbourne, but people are going to have to move a lot further out to get them.

"Then you have the whole issue of infrastructure and public transport in those areas."


The recently released interim report of the Liberal and Nationals body, Victorian Population Policy Taskforce, claimed that Melbourne's population growth, which is tipped to hit eight million by 2051, threatens the city's "liveable city reputation".

"Victoria is growing at over 100,000 people every year yet there is no clear plan to ensure that infrastructure and services keep pace with this enormous growth in our population," the report authors stated.


Independent economist Saul Eslake lived in Melbourne for 31 years before moving to Hobart and he shares the concerns of planners, opposition MPs and locals.

"Melbourne is at risk of becoming as unliveable as Sydney," Eslake said.

"The rapidly rising house prices are a source of growing inequality and social division.

"While rising prices are great for people who have at least one property, they are terrible for those who don't, and so you end up with this great polarisation within the community.

"When you get to a situation where police officers and nurses can't afford to buy a home in the community they contribute to and are engaged with, you have a real problem."

Eslake said Melbourne's "peak livability levels" peaked in 2004 - when growth was still buttressed by accessible transport and affordable housing options - but it's been on a downward slope since then.

"If you have rapid population growth without the planning, life becomes harder in ways that are hard to capture in statistics," Eslake said.

"People are being forced further out to afford housing, they're commuting long distances everyday because they're on the city fringes, and the public transport is also packed."


Eslake said both state and federal governments have a role to play in easing Melbourne's property and population crisis.

While he believes stamp duty tax breaks for first homebuyers merely pushes up prices as a result of increased competition, he called on the state government to increase housing supply where possible and improve infrastructure.

"Transport policy is housing policy and if there is good transport farther out in the suburbs, people are more likely to want to move there," he said.

As for the federal government's role, he believes they have a duty to rein in the investor market, which is a "very significant" contributor to housing unaffordability.

"Back in 1991-92, for example, investors and first home buyers each made up 18 per cent of the total lending market, while nowadays the first homebuyer levels are lower than 10 per cent and the investor market is just under 50 per cent.

"So (Treasurer) Scott Morrison can't tell me that investors haven't squeezed first home buyers out of the market."

Kusher agreed that further infrastructure investment was crucial, alongside the creation of "major work nodes" outside of the Melbourne CBD.

"It would place a lot less pressure in the commute if there was a series of work centres outside the CBD that people travelled to," Kusher said.