Housing market remains ‘severely unaffordable’

Despite a 4.8 per cent tumble in house prices across Australia in 2018, the 15th Annual Demographia International Housing Affordability Survey, which ranks markets’ housing affordability by linking median house prices to median household incomes, has declared the nation’s housing market “severely unaffordable”.

Of the world’s 91 “severely unaffordable” housing markets, Demographia ranked Sydney as the third least affordable, followed by Melbourne in fourth position.

According to the survey, Australians can expect to pay on average 5.7 times their household income to purchase property across all markets nationwide. The figure increases to 6.9 per cent when only taking into consideration the nation’s major housing markets (Sydney, Melbourne, Brisbane, Perth and Adelaide).

The figure balloons further to 11.7 and 9.7 for properties in Sydney and Melbourne, respectively.

“Despite what has been called the largest Sydney price reduction in 35 years, house prices relative to incomes are more than double the rate of the early 1980s,” Demographia’s annual report states.

“In Sydney and Melbourne, median income households need at least three years more of income to pay for the median priced house than in 2004, when the first survey was published.”

The median house price in Adelaide is 6.9 times the median household income, with the South Australian capital ranked as the 16th least affordable market globally.

In Brisbane, the median house price is reportedly 6.3 times the median household income. The Queensland capital ranked as the 18th least affordable market.

Perth was declared the 24th least affordable market globally, with the median house price 5.7 times the median household income.

The most affordable markets in Australia, according to Demographia, are in Queensland.

The median prices in Gladstone and Rockhampton are 3.2 and 3.9 times the median household income, respectively.

“Australia’s generally unfavourable housing affordability is in significant contrast to the broad affordability that existed before implementation of urban containment (called ‘urban consolidation’ in Australia),” Demographia’s report states.

“The price-to-income ratio in Australia was below 3.0 in the late 1980s.”

The only major markets less affordable than Sydney are Hong Kong and Vancouver.

Vancouver and Hong Kong’s median house prices were found to be 12.6 times and 20.9 times the median household income, respectively.

More broadly, the median house price across Canada is on average four times the median household income, or 4.3 times higher when only considering the major Canadian markets.

Hong Kong’s figure remains the same, at 20.9, when considering all markets nationwide.

[Related: House values plunged by 4.8% in 2018]