Sydney ranked second least affordable city in world and Melbourne ninth in housing affordability
Sydney is ranked as the second least affordable city in the world.
The NSW capital has been awarded the dubious honor in the Demographia International Housing Affordability report for the second year in a row.
Sydney came in second behind first-placed Hong Kong, while Melbourne also appeared in the top 10, entering at number nine.
Adelaide ranks 14th, Brisbane 15th and Perth 50th.
Sydney is ranked as the second least affordable city in the world
Sydney was ranked the third least affordable city in the world in 2021 in the report, before rising to second in 2022, overtaking Vancouver by the US think tank.
The city’s median home price of $1.2 million is 13 times an average full-time salary of $94,000, not including a mortgage deposit.
Top 10 least affordable cities in the world
1. Hong Kong
5. San Jose
8. San Francisco
Source: Demographia International Housing Affordability Report
While Sydney’s median house prices fell by 14.7 percent over the past year, they rose by 27.7 percent during the pandemic, a level well above the 3.3 percent rise in wages, data from CoreLogic and the United States showed. Australian Bureau of Statistics.
During the peak of the boom, when Reserve Bank interest rates hit a record low of 0.1 percent, house prices in some suburbs rose at levels significantly above the 7.8 percent inflation rate, known as the consumer price index.
Prices in Sydney rose 6.0 times the CPI, Brisbane 5.2 times, Melbourne 4.9 times and Perth 4.2 times.
‘In each of these five housing markets, house price inflation has been higher since 2000 than that of all product groups that make up the CPI.’
The report warned that rising prices could lead to a drastic drop in living standards.
“As the pandemic and lockdowns continued for another year, the relocation of households from denser urban neighborhoods to larger homes, often with large gardens (gardens) in suburban and remote areas, continued,” it read.
‘The result is that prices have risen at an unprecedented rate in many markets.
“As a result, many low- and middle-income households that have already suffered the worst from housing inflation will see their living standards fall further.”
Melbourne also appeared in the Top 10 Least Affordable Cities in the World, coming in at number nine
Wendell Cox of the Urban Reform Institute described the rise in house prices as an “existential threat” to the middle class.
Australian median house prices
Source: CoreLogic, February 2023
“There is a widespread perception that deteriorating housing affordability poses an existential threat to the middle class,” he said.
Housing affordability in 2022 still reflected the massive price increases that occurred during the pandemic demand shock.
“Since then there have been some improvements in housing affordability and there are likely to be more as the demand shock is hopefully replaced by more normal market trends.”
Home prices will recover once interest rates stop rising and some new immigrants choose to buy homes as the influx fuels a rental crisis, experts say.
Australia’s net annual immigration in the year to September 2022 was 303,700 people – a 15-year record – bringing the total population above 26.1 million.
This was the largest increase abroad since late 2008 and includes skilled migrants, family reunions and international students.
The number of immigrants was also significantly higher than the October budget forecast of 180,000 for 2022-23 and the projected level of 235,000 for 2024-25.
Tim Lawless, head of research at property data group CoreLogic, said higher immigration is likely to help house prices recover once the Reserve Bank of Australia stopped raising interest rates.
An overall population growth rate of 1.6 percent was back to pre-pandemic levels, new data from the Australian Bureau of Statistics showed.
By comparison, New Zealand’s population grew just 0.2 percent over the same period, while the US population grew 0.4 percent last year.