It’s little wonder housing affordability in Australia is an increasingly prominent issue, with two state capitals now among the 10 most expensive cities in the world in which to buy property.
The 2023 Demographia International Housing Affordability Scheme report, compiled by Canadian think tank The Frontier Centre for Public Policy, ranked Sydney as the second most unaffordable place globally to purchase a home, with Melbourne taking fifth spot.
According to the research, the only city more unaffordable than Sydney for housing was the Asian financial hub of Hong Kong, where property cost around 18 times the average salary.
In Sydney a median multiple of 13 was needed, while in Melbourne the multiple was 10.
All five of Australia’s major housing markets – Sydney, Melbourne, Adelaide, Perth and Brisbane – have been severely unaffordable since the early 2000s, the report found.
“Australia’s major housing markets have had especially severe housing affordability losses,” says the report’s author, Wendell Cox.
“In each of these five housing markets, the house price inflation since 2000 exceeded that of all of the product groups constituting the Consumer Price Index such as food, clothing, transportation and education and health.”
Looking ahead, a key report from The Urban Land Institute, an international non-profit research and education body, predicts housing will get even more expensive in Australia.
“In the coming years, the housing situation for lowto-middle income Australians is expected to worsen,” the organisation’s 2023 Asia Pacific Home Attainability Index report says.
“A rebound in inbound migration of wealthy individuals and skilled workers, such as medical professionals who are generally well paid, will create more demand for housing and crowd out low-to-middleincome Australians unless a substantial surge occurs in the supply of new homes that target low-to-middleincome families,” it predicts.
It notes that some capital city price relief may come from governments promoting higher-density apartment units over the years ahead as well as demographic trends started during the COVID-19 pandemic such as people “looking for more space who are able to work remotely migrating from Sydney to smaller regional cities”.
While this may be good for city prices, it is likely to shift the burden to create “a housing shortage in the regional cities, worsening home attainability for the existing residents”.
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