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.
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.
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.
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Property markets have hotted up again but a crash remains unlikely.