International Housing Affordability Report: Sydney, Melbourne and Adelaide declared among the least affordable cities to buy a home
A leading economist fears more Aussies will have fewer children or be excluded from employment after Australia was declared one of the most unaffordable housing markets in the English-speaking world.
The grim forecast comes after the annual Demographia International Housing Report ranked Sydney as the second least affordable city in the world to buy a home.
Melbourne (seventh) and Adelaide (ninth) were also in the top 10 least affordable cities for housing affordability.
The survey was conducted by the Chapman University Frontier Center for Public Policy, an independent public policy think tank, which ranked Hong Kong as the least affordable place to live.
The study, conducted over the past two decades, measures housing affordability by comparing median household income using a measure known as the “median multiple.”
The annual Demographia International Housing Report ranked Sydney (pictured) as the second least affordable city to buy a home in the English-speaking world
Sydney has been in the top three least affordable places to live fifteen times in the past sixteen years.
The Port City was deemed ‘impossibly unaffordable’ in the latest report, with prices at 13.8 times the average income.
Independent economist Saul Eslake feared more Australians were ‘delaying childbearing or having fewer children’.
“It forces people to make choices they might not otherwise have about where they live,” he said The Daily Telegraph.
Mr Eslake said more people will be forced to travel longer to get to and from work, which could deter them from pursuing employment and economic opportunities.
“It could force people to spend much more time than they would choose commuting, or it could cut people off from sources of employment,” he added.
Professor Bill Randolph, director of the University of NSW City Futures Research Centre, believes the cost of housing will stifle economic growth because people won’t have enough money to spend on other things.
“The amount of money or debt capital that is going into housing through mortgages is really putting a strain on the economy and it means there is no capital available to spend on other things,” he told the publication.
“If you spend half your money on a mortgage, you don’t spend it on going out, new clothes or a new car because you can’t afford it.”
Melbourne (pictured) was the seventh most unaffordable city to find a home in
The report shows that the cost of housing is placing significant financial pressure on most households during the ongoing cost of living crisis (photo: beachgoers in Bondi, Sydney)
The research, which compares homes in 94 markets in Australia, the United Kingdom, the United States, Canada, Hong Kong, Ireland, New Zealand and Singapore, indicates that most households are struggling with the cost of housing.
“Middle-income households face rapidly rising housing costs, which is the main driver of the current cost of living crisis,” the report said.
‘Affordability in high-income countries is disappearing as housing costs now far exceed income growth.’
“The crisis stems primarily from land use policies that artificially limit housing supply, drive up land prices and make homeownership out of reach for many.”
House prices across Australia are on average 9.7 times higher than the amount an average income earner earns in wages across the country.
This figure is higher than the difference between house prices and average incomes in the US, UK, Canada, Ireland and New Zealand.
All five of Australia’s top housing markets have been seriously unaffordable since the early 2000s or before, the report said.
According to the report, some of the most affordable housing markets include Pittsburgh in the US, Edmonton in Canada and Lancashire in Britain.
Australians are struggling with rising house prices in major capital cities as demand for new homes exceeds housing supply.
Three Australian capitals were named in the most affordable top 10, including Adelaide
The latest figures from property website Domain show that the average house price for a house in Sydney is $1,627,625.
The average price of a house in Melbourne is $1,032,020, while the average price in Adelaide is $902,332.
Across Australia, only 945,554 new homes have been approved in the past five years and 240,000 homes need to be built annually to reach the target of building 1.2 million homes in the next five years.
The mandate, which will take effect in mid-2024, was established by the National Cabinet last year.
To make matters worse, homeowners have been hammered by successive rate hikes, with the Reserve Bank having raised rates 13 times since May 2022.
The current cash interest rate is 4.35 percent.
Sydney (pictured) has remained a persistently unaffordable city in the world to find a place to live, with the city ranking in the top three least affordable places to live fifteen times in the last 16 years