The 13th Annual Demographia International Housing Affordability Survey, which ranks markets’ housing affordability by linking median house prices to median household incomes, has ranked Sydney as the second least affordable major housing market in the world, alongside Hong Kong and Vancouver.
According to the survey, home buyers can expect to pay 18.1, 12.2 and 11.8 times their median income (median multiple) for a property in Hong Kong, Sydney and Vancouver.
In regards to Sydney in particular, the survey pointed out that the city’s median multiple was 7.6 in 2004 and has risen by 60 per cent since then (to 12.2), which represents “the poorest affordability ever recorded by the survey outside Hong Kong”.
Of the world’s 94 'severely unaffordable' housing markets identified by the report, 33 are in Australia (out of a total of 54).
“All of Australia’s five major housing markets are severely unaffordable,” the survey said.
According to the survey, Melbourne has a median multiple of 9.5 and is the fifth least affordable major housing market. Only Hong Kong, Sydney, Vancouver, Auckland and San Jose are less affordable than Melbourne.
Adelaide has a severely unaffordable 6.6 median multiple and is the 16th least affordable of the 92 major markets. Brisbane has a median multiple of 6.2 and is ranked 18th least affordable, while Perth, with a median multiple of 6.1 is the 20th least affordable major housing market.
“Australia’s generally unfavourable housing affordability is in significant contrast to the broad affordability that existed before implementation of urban consolidation policies,” the report commented.
“The price-to-income ratio in Australia was below 3.0 in the late 1980s. All of Australia’s major housing markets have severely unaffordable housing and all have urban containment policy.”
Overall, Australia’s 54 housing markets have a “severely unaffordable” median multiple of 5.5. Four housing markets are affordable, three are moderately unaffordable, 14 are seriously unaffordable and 33 are severely unaffordable.
Rounding out the top five of the world’s least affordable major housing markets are Auckland and San Jose, where buyers can expect to purchase homes for 10.0 and 9.6 times their median income, respectively.
[Related: Bubble risk ‘eminent’ in Sydney]