All five of Australia’s major housing markets are still ‘severely unaffordable’, despite property prices dropping across 2019, new research has revealed.
Demographia’s International Housing Affordability Survey found Sydney was the third-least affordable housing market in the world for the second year in a row, and the least affordable housing market in Australia.
Interestingly, Sydney has maintained its unaffordable status despite median property prices dropping almost $100,000 in the year to June 2019.
Melbourne is the second-least affordable housing market in Australia, followed by Adelaide, Brisbane and Perth. The only affordable housing market in Australia is Gladstone in Queensland.
“Australia’s high house prices have increased the cost and demand for subsidised housing,” the research revealed.
The Australian Housing and Urban Research Institute estimated current housing needs in Australia to be 1.3 million households, and expects that need to worsen.
According to CoreLogic research, Australia’s ‘unaffordable’ status looks like it’s here to stay.
The property research firm’s quarterly Pain and Gain report found almost nine in ten property resales over the September 2019 quarter sold for more than their previous price, with Hobart leading the market.
Why are Australian housing markets so unaffordable?
According to Demographia, Australia’s housing market only entered ‘severely unaffordable’ territory after the implementation of urban consolidation.
Urban consolidation is a response to increasing population involving the delivery of higher-density housing in high growth areas without extending the boundaries of the area, and it’s now a key planning policy in all Australian capitals.
“Australia’s generally unfavorable housing affordability is in significant contrast to the broad affordability that existed before implementation of urban containment,” the researchers said.
“The price-to-income ratio in Australia was below 3.0 three decades ago. All of Australia’s major markets have urban containment policy and all have severely unaffordable housing.”
How does Australia compare with the rest of the world?
Hong Kong and Vancouver are the two least affordable housing markets in the world, according to the survey of 309 cities globally.
Hong Kong’s Median Multiple, meaning the ratio of the media house price by the median gross annual household income, is 20.8.
The city’s median household income is HK$300,000 (AU$56,424), and the median home is more than HK$5.4 million (AU$1.015 million).
That compares to Sydney, where the average salary is around $74,000, and median house prices are now $1.142 million.
All major Australian housing markets are more expensive than New York and Miami, and Sydney and Melbourne are more expensive than Los Angeles, San Francisco and London, the report found.
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