Housing affordability continues to deteriorate in Australia, with Sydney and Melbourne ranked among the top five least affordable major housing markets in the world, according to the 14th edition of Demographia International’s annual Housing Affordability Survey.
Among the 92 major metropolitan markets surveyed, Sydney was ranked the second least affordable, behind Hong Kong, for the third consecutive year. Third place went to Vancouver, followed by San Jose and Melbourne.
Demographia rates middle-income housing affordability using a measure called the median multiple. This measure captures the median house price divided by the median household income in a given market.
To be considered affordable, a market needs to have a housing affordability rating of 3.0 and below. Markets with a rating of 5.1 and over are considered to be severely unaffordable.
Sydney has a median multiple of 12.9, which means a dwelling costs more than 12 times the average annual household income. Melbourne has a median multiple of 9.9.
Nationally, Australia was ranked the third least affordable country, behind New Zealand and mainland China.
Demographia blames Australia’s strained housing affordability on its urban containment policies, which aims to check the growth of urban sprawl by encouraging greater density in existing housing areas.
“Urban containment policies are often accompanied by costly development impact fee regimes that disproportionately charge the cost of the necessary infrastructure for growth on new house buyers. There is particular concern about the cost increasing impacts of these fees and levies, especially in Australia,” Demographia said.
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