In further confirmation of the current housing crisis plaguing the NSW capital, housing in Sydney was found to be the 2nd least affordable in the world, with Hong Kong taking the dubious honour of 1st place. Melbourne’s housing market was ranked 6th in the list, whilst Australia overall was ranked as the 3rd least affordable nation in which to buy a house.
— 9Finance (@9Finance) January 24, 2017
Demographia’s latest International Housing Affordability Survey ranked over 406 metropolitan areas in nine developed countries around the world: Australia, New Zealand, Canada, Hong Kong, Ireland, Japan, Singapore, the United Kingdom and the United States.
How the study rated affordability in each city
The study rates housing affordability using the ratio of median house price to median household income in each city, a ratio dubbed the Median Multiple. Comparing typical incomes to typical prices allowed Demographia to compare affordability between vastly different metropolitan areas. Ratios of 3.0 or less were considered ‘Affordable’, and any ratio of 5.1 or over was given the worst rating of ‘Severely Unaffordable’; Sydney‘s ratio was 12.2.
Hong Kong remains the least affordable major housing market in the world by a long way, with a Median Multiple of 18.1. It was followed by Sydney, then by Vancouver, Auckland and San Jose. Melbourne was next with a Median Multiple of 9.4, followed closely by Honolulu, Los Angeles, San Francisco and finally Bournemouth in the U.K.
Source: Demographia, p.14
When all housing markets were considered – not just major cities – the story became even worse for Aussies; Sydney and Melbourne remained in the top 10, but Melbourne was leapfrogged by Wingcaribbee Shire in NSW (which encompasses Moss Vale and Mittagong), and by Tweed Heads on the QLD-NSW border.
All five of Australia’s biggest cities were classified as ‘Severely Unaffordable’, with a median market rating of 6.6; all were ranked within the top 20 for lack of affordability. The nation as a whole – taking into account 54 different metropolitan areas – scored a 5.5, making it the 2nd least affordable country in the survey after New Zealand (5.9) and Hong Kong.
Source: Demographia, p.16
As if the current median cost wasn’t enough, Sydney’s housing affordability is continuing to worsen. The first Demographia survey in 2004 recorded Sydney’s Median Multiple at 7.6 – a figure which has risen by 60% since then, to the worst housing affordability ever recorded outside Hong Kong.
Five things NSW Premier Gladys Berejiklian must do to make Sydney housing affordable https://t.co/3P3UK7sGXF
— The Daily Telegraph (@dailytelegraph) January 24, 2017
As if the current median cost wasn’t enough, Sydney’s housing affordability is continuing to worsen. The first Demographia survey in 2004 recorded Sydney’s Median Multiple at 7.6 – a figure which has risen by 60 percent since to the worst housing affordability ever recorded outside Hong Kong.
Affordable housing markets in Australia
Aussies looking for an affordable place to buy a home have few options. Four housing markets in Australia were considered ‘Affordable’: Karratha, Port Hedland, Kalgoorlie (all WA) and Gladstone (QLD) were the most affordable Australian towns, but all are heavily dependent on mining operations to support the local economy. Karratha was the 5th most affordable city surveyed worldwide.
— Sky News Australia (@SkyNewsAust) January 25, 2017
10 most affordable housing markets in the developed world
If the Australian property market has priced you out, you could always consider moving to the United States; eight of the 10 most affordable cities to live in were all located in the US, with all scoring a Median Multiple of 2.1 or less. The city of Racine, Wisconsin (south of Milwaukee) scored just 1.8, making it the most affordable city in the entire survey – if you can handle the cold and love a bargain, maybe a change of scenery is in order.
Source: Demographia, p.17
What causes housing to be unaffordable?
Demographia’s main conclusions were that lack of affordability was mainly caused by a lack of housing supply. Various combinations of land and development restrictions have seen many major cities lack the necessary land to develop affordable housing – a problem which is best addressed through improved public policy.