Sydney has recently been ranked the world’s second most unaffordable city, coming in just behind Hong Kong. This ranking, determined by the Demographia International Housing Affordability report, is based on the “median multiple” metric, which divides the median house price by the gross median household income. Sydney’s median multiple is alarmingly high, highlighting severe unaffordability.
Sydney’s median house price has soared to a record $1.6 million and shows no signs of slowing down. The city’s sky-high property prices are a result of high demand and limited land availability. Compounding this issue is Australia’s high immigration rate, with many new arrivals opting to settle in Sydney and Melbourne. This influx has created sustained pressure on the housing market, further driving up prices.
The top ten list of the world’s most unaffordable cities includes several Australian cities, underscoring a national issue. Melbourne and Adelaide also feature prominently, ranking seventh and ninth respectively. These rankings reflect a broader trend in Australia’s major cities, where housing affordability continues to deteriorate.
Melbourne, like Sydney, is grappling with significant housing challenges. The Victorian capital has seen house prices increase at nearly five times the rate of inflation since 2020. Melbourne’s property market has been characterised by robust demand and a relatively constrained supply, leading to its current position among the least affordable cities globally.
Adelaide, while less often in the spotlight compared to Sydney and Melbourne, also faces severe affordability issues. The South Australian capital has experienced substantial property price growth, driven by similar factors of high demand and limited supply. Adelaide’s inclusion in the top ten most unaffordable cities reflects a nationwide crisis affecting all major Australian markets.
Brisbane and Perth, though not in the top ten globally, are also struggling with affordability. Brisbane has become Australia’s second most expensive city after Sydney, with property prices surging in recent years. This growth is attributed to a combination of interstate migration, lifestyle appeal, and economic opportunities. Perth, while not as unaffordable as Sydney or Melbourne, has still seen significant property price increases, driven by mining booms and a strong local economy.
The Gold Coast, known for its beaches and lifestyle, is not immune to these trends. Although not ranked among the top ten most unaffordable globally, the Gold Coast has seen its property market heat up considerably. High demand for coastal living, coupled with limited land availability, has pushed prices upward, creating affordability challenges for many residents.
The high cost of living and property in these cities is pushing many potential buyers towards renting. Sydney, for example, has a large portion of its population renting due to the prohibitive costs of purchasing property. This trend is mirrored in other expensive cities worldwide, such as New York. With limited supply and ever-increasing demand, the prospects for housing affordability in Sydney and other major Australian cities appear bleak.
Investors, however, may find some silver linings. High rental incomes can help offset the cost of owning property in these high-demand areas. While not covering the full cost, rental income can make it more feasible to hold onto these valuable assets, potentially benefiting from long-term capital growth.
The Australian housing market’s current state is a clear indicator of broader socio-economic trends. High immigration rates, economic opportunities, and lifestyle attractions draw people to cities like Sydney, Melbourne, and Brisbane, creating sustained pressure on housing markets. Without significant policy changes or interventions to increase housing supply or control demand, these affordability issues are likely to persist.
In summary, Australia’s major cities are grappling with severe housing affordability issues. Sydney, Melbourne, and Adelaide are among the least affordable cities globally, with Brisbane and Perth also facing significant challenges. The high cost of housing is pushing many towards renting, reflecting broader trends seen in other global cities. The prospects for affordability improvements in these markets remain slim, given the current dynamics of high demand and constrained supply.
These findings highlight the need for comprehensive housing policies and interventions to address the affordability crisis. Without such measures, the dream of homeownership will remain out of reach for many Australians, with renting becoming the more feasible option for a growing number of residents.
Sydney has been ranked the world’s second most unaffordable city, only slightly edged out by Hong Kong
- Hong Kong, China
- Sydney, Australia
- Vancouver, Canada
- San Jose, USA
- Los Angeles, USA
- Honolulu, USA
- Melbourne, Australia
- San Francisco, USA
- Adelaide, Australia
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