Five Aussie cities feature on global unaffordability list
Australia is one of the least affordable housing markets in the world, with several of its major cities ranking among the most expensive places to buy property.
The latest Demographia International Housing Affordability Report rated Sydney as Australia’s most expensive housing market, with the city’s median price 13.8 times the median household income.
Adelaide, once considered the nation’s affordable capital, has also seen affordability deteriorate sharply. Its housing costs are now 10.9 times local incomes, making it the second-least affordable city in Australia. Next come Melbourne at 9.7, Brisbane at 9.3 and Perth at 8.3 – placing the country’s five big capitals among the world’s 15 most unaffordable markets.
Why housing affordability has declined
Ray White Group Chief Economist Nerida Conisbee said Australia’s affordability challenge ran deeper than restrictive planning rules.
“Where Demographia sees restrictive planning as the key driver of unaffordability, the Australian experience is more complex,” Ms Conisbee said.
“While limits on urban expansion play a role, local resistance to higher density is likely a more pressing constraint as is the desire of Australians for large homes. At the same time, a sharp rise in construction costs since the pandemic has made new projects harder to deliver, compounding the affordability challenge.”
Ms Conisbee said affordability was unlikely to improve in the short term.
“September data show national house prices up 8.9% over the year and on track to reach double-digit annual growth by December. Any further Reserve Bank rate cuts will fuel stronger growth, while generous first-home buyer incentives are driving sharp gains at the cheaper end of the market,” she said.
Australia’s housing cost-to-income ratio of 9.7 compares unfavourably with other high-income countries such as the UK (5.6), Canada (5.4) and America (4.8).
If you’re concerned about how housing affordability trends might affect your plans to buy or invest, reach out to discuss your options and explore what’s possible in today’s market.