Sydney’s housing market has ranked as the second least affordable in the world for the second year running, posing a threat to standards of living. A global report rating middle income housing affordability has ranked Sydney 93rd out of 94 metropolitan markets.
The Demographia International Housing Affordability report for 2023 was released recently with Sydney ranking just ahead of the world’s least affordable nation Hong Kong. Sydney retained its position from the 2022 report after falling from the third least affordable market in 2021, with the report revealing house prices had increased six time the rate of inflation. Housing affordability in 2022 continued to reflect the huge price increases that occurred during the pandemic demand shock. Some housing affordability improvements have since occurred and more are likely as the demand shock is hopefully replaced by more normal market trends.
The latest report, from the 2022 September quarter, ranked markets based on income in relation to housing prices across Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom and the United States. According to the report, Sydney has the least affordable market, with a median multiple of 13.3, the second least affordable market internationally. Australian markets have a median multiple of 8.2, up from 6.9 in 2019.
This is an increase of 1.3 years of median household income. “All five of Australia’s major housing markets have been severely unaffordable since the early 2000s. Australia’s other major cities also ranked highly on the least affordable housing market list, with Melbourne in 9th position, Adelaide 14th, and Brisbane 15th. Perth is ranked at 50th.
Australia’s major housing markets have had especially severe housing affordability losses. Adelaide median house prices have increased 6.1 times the rate of inflation since 2020, as measured by the Consumer Price Index (CPI). Sydney prices increased 6.0 times the CPI, Brisbane 5.2 times, Melbourne 4.9 times and Perth 4.2 times. In each of these five housing markets, the house price inflation since 2000 exceeded that of all of the product groups constituting the CPI. The top three markets for affordability were in the US, with Pittsburgh the most affordable, followed by Rochester (New York) and Cleveland.
