The great Australian dream isn’t looking so great anymore. For those in our nation’s largest capital cities, it’s turned into more of a living nightmare. A new global study has ranked all of Australia’s major housing markets as ‘severely unaffordable’ (or worse), placing our nation as the second least affordable housing market in the entire world. This is hardly a title we ever wanted or needed.
For the past 20 years, the Demographia International Housing Affordability Report has analysed middle-income housing affordability across 94 major markets in eight countries, including Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom and the United States. The report ranks each city based on its median multiple score, calculated by dividing the average house price in a city by its gross median household income. A score of 5.1 or more is considered ‘severely unaffordable’, and this year, a new category, ‘impossibly unaffordable’, was introduced for those scoring nine or above.
The semi-good news is that nearly 90 per cent of cities in the world did not fall in the ‘impossibly unaffordable’ category. However, the bad news is more than a quarter of those cities deemed as ‘impossibly unaffordable’ are in Australia.
Anyone hoping to buy a home in Sydney should start considering Plan B. Just like last year, Australia’s largest capital city ranked as the second least affordable major property market in the world. With a staggering median multiple of 13.8, typical Sydney homes cost about 13 times the average household’s annual income. This marks the 15th time in the last 16 years that Sydney has claimed a spot in the top three.
Melbourne and Adelaide also cracked the top ten least affordable cities for local home buyers. Victoria’s capital ranked seventh with an ‘impossibly unaffordable’ median multiple of 9.8, climbing two spots from last year. Adelaide wasn’t far behind, landing in ninth place with a median multiple of 9.7 – a significant jump from its 14th place ranking in 2023.
Both Brisbane and Perth were classified as ‘severely unaffordable’, ranking 13th and 16th respectively. This marks a huge leap from Perth, which ranked as the 50th least affordable major property market in 2023. Despite this jump, Perth is still at least 50 per cent more affordable than its East Coast sibling, Sydney.
The report highlighted that skyrocketing housing prices, which outpace income growth, are the main cause of this nationwide middle-class housing crisis. This issue is only escalated by limited land availability and surging demand. Perhaps it’s time to trade your thongs for some snow boots and head to Pittsburgh, which was ranked as the most affordable housing market out of all 94 cities analysed.
Here are the ten least affordable major housing markets in the world:
1. Hong Kong, China
2. Sydney, Australia
3. Vancouver, Canada
4. San Jose, USA
5. Los Angeles, USA
6. Honolulu, USA
7. Melbourne, Australia
8. San Francisco, USA
9. Adelaide, Australia
10. San Diego, USA
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