Australian capital cities among the world’s most expensive

When it comes to housing affordability, a number of our capital cities have not fared well.

There are 29 ‘severely unaffordable’ major housing markets that exist internationally—and of those, Sydney, Melbourne, Adelaide, Brisbane and Perth all rank among the top 20.1

These are the findings from this year’s Demographia International Housing Affordability Survey, which assesses housing markets across nine countries including Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States.

Geographical breakdown

According to the survey, which measures affordability using a house-price to household-income ratio, Sydney was the second most unaffordable major housing market across the globe.

Coming in first was Hong Kong in China, with Vancouver in Canada and Auckland in New Zealand coming in third and fourth respectively, and San Jose in California coming in at number five.1

As for where other Australian capital cities sat on the ladder, Melbourne came in at number six, Adelaide at 16, Brisbane at 18 and Perth at 20.

Australia up close

The report said looking at Australia’s smaller housing markets of which there are 54, 33 were severely unaffordable, 14 seriously unaffordable, three moderately unaffordable, with just four rated affordable.

The smaller housing markets deemed affordable included Karratha, Port Hedland and Kalgoorlie in Western Australia, and Gladstone in Queensland, albeit the report said these areas were dependent on industries that had seen a major downturn in recent years, with house prices falling considerably.

Contributing factors

Affordable housing has a lot to do with ‘avoiding’ the type of urban planning policies that artificially raise property prices, specifically urban containment1, which according to the report is a major contributor to the housing affordability crisis in Australia.

Put simply, urban containment is where housing development is restricted to existing areas of development instead of opening up new sites. This strategy can impact prices because limited availability increases demand for existing supply.

The report also pointed to property prices increasing at a much faster rate than household income.

What to do

If your goal is to buy a property, while Australia might seem like a slightly tougher nut to crack, there are still a variety of avenues you can explore.

For tips and information visit our Q&AMP info centre or check out News&insights for more property related articles.

AMP also offers competitive rates on a range of home loans, so if you’d like to request a call back from one of our home loan specialists, provide your details via our online tool.

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.