As the debate surrounding housing affordability gathers momentum, a new survey has found that markets throughout Australia rank among the world’s least affordable in which to purchase new dwellings.
Unveiling the results of its latest survey of 367 urban markets across nine countries, Demographia says the ratio of median house prices to incomes is above the 5.1 it considers to be ‘severely unaffordable’ across 33 Australian markets.
In terms of ‘major’ markets, houses were considered to be severely unaffordable across all five main capitals around the country.
With a median house price to income ratio of 12.2, Sydney led the way across Australian capitals followed by Melbourne (9.7), Perth (6.6), Adelaide (6.4) and Brisbane (6.1).
Sydney’s score means that it has leap-frogged Vancouver (10.8) to become the world’s second least-affordable market behind Hong Kong (19.1).
Melbourne tied for fourth with Auckland and San Jose at 9.7, followed by San Francisco (9.4) and London (8.5).
All up, out of the 51 Australian markets included in the survey, 33 were considered to be severely unaffordable, while a further 12 were considered ‘seriously unaffordable’ (median house price/income ratio of between 4.1 and 5.0) and four were ‘moderately unaffordable’ (3.1 to 4.0).
Just two markets, Karratha 2.9 and Kalgoorlie (2.5), came in under the 3.0 mark considered by Demographia to be ‘affordable.’
It should be noted that the survey deals with detached house prices only and does not take into account apartment or multi-unit prices.
The latest survey comes amid growing levels of debate surrounding the question of how to improve the affordability of housing across major cities in Australia.
As our population has grown, there have been increasing levels of concern that the supply of new housing has not kept pace, and there have been growing calls to undertake supply-side reform to free up the capacity of the property industry to deliver a sufficient quantity of housing at an affordable price.
Commenting on the report, former Housing Industry Association president and now Family First Senator Bob Day said the ‘scarcity’ that drove up house prices was ‘wholly contrived’ and a matter of political choice rather than geographic reality.
Day says the impact of rising prices cannot be understated.
“The problem is, it is young home buyers, hit with spiralling costs of home ownership, who end up paying,” he said. “They are mostly forced into overpriced units and will never be able to afford their primary ambition – a free-standing family home of their own.”