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Where are the big investors parking their wealth for the long term in Australia? Not all locations are set to perform the same in the next 10 years. In this episode, I'll be unpacking the top three locations that have all the data pointing towards serious capital growth over the next 10 years. I'll also be unpacking leading house prices, rental yield, and loads more data. I'm Joma, Senior Research Analyst at InvestorKit.
Let's get into it. The first location I'm going to talk about is Melbourne. I like to call it the recovering giant. It's not growing really fast now, but it has a lot of potential to grow very well in the next 10 years. Medium price now in Melbourne is $850,000.
In the past one year, there's 0% growth and rental yield is 3. 8%. Not really attractive considering our interest rates are still relatively high. Why do we believe it's going to perform well in the coming 10 years? Here are the three major drivers.
First, the relative affordability. In the past 10 years, in the past 20 years, Melbourne's median house price has been always around 70 to 85% of Sydney's. But now, without growth for almost three years, Melbourne's median house price is just 58% of Sydney's median house price. And in terms of relative affordability compared to the local income level, it is now 17% overvalued. It is now 17% overvalued.
This is compared to Sydney's 46%, Brisbane's 26%, Adelaide's 22%, and Canberra's 22% as well. So it is actually one of the most affordable capital cities across Australia. The second driver is the heavy infrastructure investment. I'm going to list some major infrastructure projects here. First one, the Suburban Rail Loop.
Estimated value is $35 billion just for the first stage. This is going to be creating thousands of jobs and boosting the connectivity across the Melbourne region. The second project, the North East Link. Estimate value $16 billion. Another transport project that will be creating thousands of jobs and increasing connectivity across different parts of Melbourne.
The third project is a medical one. I'm talking about the Biomedical Precinct Parkville. The estimate value is now $14 billion. Instead of just creating construction jobs, it's actually going to offer many more jobs across healthcare, medical research, and more during its operations phase. The next big project is the La Trobe University City.
$5 billion in value and is expected to create more than 20,000 jobs and $3. 5 billion in GRP over 10 years. And we have the current airport upgrade building a third runway. It's just announced in 2025 and is expected to expand Melbourne Airport's capacity to enable more flights and reduce delays. The third driver I'm talking about is the strong population growth.
Greater Melbourne's population growth rate now is 2. 74%, ranked second place in the eight capital cities just behind Perth. The high population growth is backed by strong overseas migration. While internal migration has always been balanced for Melbourne, overseas migration has increased dramatically over the past few years. The number of overseas migrants as a percentage of its total population is now 2.
27% and that is ranking number one across all states, across all capital cities. Second city I'm talking about is Brisbane. Median house price there is now $930,000. In the past five years, house prices have increased by 74%, annualized at around 12% per year. That's really impressive growth and that has made many people think that Brisbane has done its growth.
It's actually true that Brisbane has passed the peak growth phase. In the past year, house prices only increased by 10%, so it's already slowing down. But we have confidence that in the coming 10 years, Brisbane will see really healthy growth overall. But we are confident that in the next 10 years, Brisbane is going to see really healthy growth. And here are two reasons why we think it is going to happen.
First is the really strong population growth boosted by both internal migration and overseas migration. Brisbane's population growth now is around 2. 7%. It's ranked number three across all capital cities after Perth and Melbourne. Brisbane is an attractive destination for both interstate migrants and overseas migrants.
The number of interstate migrants as in share of population is now 0. 56%. It doesn't look high, but it's ranked number one across all capital cities. In terms of overseas migration, the number of immigrants as a share of population is now 1. 6%, still lower than Sydney or Melbourne, but it has been increased a lot in the past five years.
Before COVID, that number was just around 0. 6, 0. 7%. So the high population growth is going to boost housing demand in the Brisbane area. And the second driver we're talking about is the sentiment boost and infrastructure project boost by the Olympics.
Because Brisbane is holding the 2032 Olympic Games, we're seeing so many people and media talking about how investors are having more and more confidence in investing in Brisbane. That's the sentiment boost I'm talking about. And then in terms of infrastructure boost, we're not just seeing infrastructure projects being initiated because of the games, but also a lot of infrastructure projects that's already happening have been fast-tracked because of the Olympics timeline. Here are some major infrastructure projects we are seeing in Brisbane right now. One, the Cross River Rail, valued at $17 billion.
It's going to improve connectivity across the Brisbane area. It is one of the projects that were already happening before the announcement of the Olympic Games, but it was fast-tracked to support the upcoming games. Now the second project is Logan and Gold Coast Faster Rail, valued at $5. 8 billion. It's going to increase the connectivity, not just within Brisbane, but also between Brisbane, Logan, and Gold Coast.
Third project is also a transport project, direct Sunshine Coast Rail Line. Now we're connecting Brisbane and Sunshine Coast better as well. This is valued at $5. 5 billion. Then we're seeing Brisbane Airport being upgraded as well, valued at $5 billion.
There'll be significant upgrades, including a third hybrid terminal. The last example here, we're talking about Bruce Highway upgrade and Gateway Motorway upgrades. So all these transport projects are set to not only increase the connectivity of Brisbane and its surrounding areas, also they'll improve the livability of the whole Southeast Queensland area to support population growth and housing demand growth. The last city I'm talking about is Adelaide. I like to call it the quiet achiever.
It's never as loud as Sydney or Melbourne or Brisbane, but it has achieved a lot of growth in the past five years. Now the median price is $840,000. In the past five years, it has achieved 81% capital growth and in the past 10 years, 102% total growth. That is higher than Brisbane's. Just like Brisbane, Adelaide has passed its peak growth phase, but in the coming 10 years, we have faith in Adelaide to achieve another round of healthy growth.
Drivers include one, tight housing supply. This can be seen in the current low inventory level of just 1. 5 months of stock and the low vacancy rate in the rental market, which is around just 0. 5%. These two indicators are showing that in Adelaide, housing supply is not catching up with the housing demand.
The second driver is steady population growth in the city. Adelaide's population growth is not as high as Melbourne's or Brisbane's. It is now at around 1. 5% in line with the national average. But if we compare this with its long-term average, it's actually improved a lot.
And the third driver we're talking about is job creation in the defense and tech industries. We're seeing a lot of high-value defense and tech projects happening in Adelaide, creating thousands of jobs. Some of the largest projects include the Hunter Class Frigate Program, $45 billion in total, and it's creating around 2,000 jobs over the construction phase. The second example is the Offshore Patrol Vessel Construction in the same shipyard, $4. 7 billion, and it will be creating 400 jobs over the construction phase.
Third defense example is the Jindalee Operational Radar Network Upgrade, valued at $1. 2 billion. Then we have a tech precinct called Lot 14 Innovation Precinct, valued at $756 million. It will be stimulating high-tech job creation and attract lots of innovative firms across multiple sectors. So we have Melbourne, Brisbane, and Adelaide as the three cities expecting very healthy growth in the coming 10 years.
For Melbourne, it is not growing really fast now, but it has the potential because of its affordability, its heavy infrastructure investment, and its strong population growth. For Brisbane, it might be slowing down now, but population is looking good, and the upcoming Olympic Games is giving the city a boost by increasing sentiment and fast-track many infrastructure projects. For Adelaide, while it is slowing down now, the overall population growth is healthy and has improved a lot compared to the past decade. Supply is staying tight, and it has the boost from lots of large defense and high-tech infrastructure projects. Those are the three cities that all the data supports the next 10 years being a solid place to invest.
While short-term gains can be great to make quick money, real wealth is built over the long term. And now you know three locations that bigger investors are backing over the long term. I'm Joma, the Senior Research at InvestorKit. I'll see you next time.
