Australia’s housing market has been labelled ‘severely unaffordable’ in a major survey of the housing markets of nine developed nations.
The Demographia International Housing Affordability Survey named Australia as the third least affordable housing market, behind only New Zealand and Hong Kong.
Sydney was by far the least affordable city in Australia, and the second least affordable of all the 92 cities and regions covered.
Only densely-populated Hong Kong, a city with a notoriously expensive housing market, was rated less affordable than the Harbour City.
Melbourne, meanwhile – the world’s ‘most liveable city’ according to The Economist – was the fifth least affordable city in the survey, behind Vancouver in Canada (also a regular on the ‘most liveable cities’ lists) and San Jose in the US.
Demographia rated cities using the ‘median multiple’, which is simply the median house price divided by the median household income.
Australia’s overall median multiple was 6.6 – which means the average Australian house costs the equivalent of 6.6 years’ annual income.
To be classed as affordable you need a score of 3 or less. Anything over 5.1 counts as severely unaffordable.
Melbourne’s median multiple was way over that at 9.9, while Sydney’s was a shocking 12.9.
Adelaide was also severely unaffordable, with a score of 6.6, making it the16th least affordable.
Brisbane scored 6.2, making it the 18th least affordable of the 92 cities, while Perth, with a score of 5.9 is the 21st.
They were all dwarfed by Hong Kong, though, which scored an astonishing 19.4.
Aside from Australia, Hong Kong and New Zealand, none of the other countries scored above 5.1. Those other countries were the UK, the US, Canada, Singapore, Japan and Ireland.
“At 12.9 Sydney’s median multiple is the poorest major housing affordability ever recorded by the Survey outside Hong Kong,” the report stated.
“Additionally, the UBS Global Real Estate Bubble Index rates Sydney as having the world’s fourth worst housing bubble risk (tied with Vancouver).”
The study blamed Australia’s poor performance on the implementation of ‘urban consolidation’ in the 1980s, a policy designed to limit urban sprawl.
Prior to this, Australia’s housing market score was below 3, classing it as affordable.