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The recovered property market is putting further strain on an already unaffordable market, as Australian housing ranks third least affordable in the world.
According to global housing affordability advocacy group Demographia’s latest annual research, despite the largest correction in Sydney’s price reduction in 35 years, house prices relative to incomes have doubled since the 1980s.
Demographia assesses housing affordability in major markets across the world through the use of a “median multiple”, which divides the median house price by the median household income.
The research found that all five of Australia’s major markets (Sydney, Melbourne, Brisbane, Adelaide and Perth) were listed as “severely unaffordable”, recording a median multiple of 5 or above — meaning the median house price was over five times the median household income.
On average, Australia’s major housing markets posted a median multiple of 6.9 — the third highest (among eight national housing markets) in the world, behind only Hong Kong and New Zealand.
The research showed that Sydney is the third least affordable city in the world, with only Hong Kong and Vancouver being less affordable.
Melbourne came in fourth for being least affordable, being a greater multiple than Los Angeles, Toronto and Auckland.
The group noted that in Sydney and Melbourne, median income households need at least three years more of income to pay for the median-priced house than in 2004 when the first Demographia survey was published.
Of the areas studied, only Gladstone in Queensland, with a median multiple of 2.8, was considered affordable.
The report also found that the high cost of property will lead to an increase in government-required subsidised housing.
The Australian Housing and Urban Research Institute estimated the “current housing need in Australia to be 1.3 million households” and expected the need to worsen.
A parliamentary briefing book found that “the stock of social housing is not increasing at a rate sufficient to keep up with demand, and waiting lists for social housing remain long”, the report concluded.
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