Australia’s largest cities are home to some of the world’s most unattainable property markets, posing significant hurdles for prospective homeowners in Sydney and Melbourne. According to Demographia’s 2023 housing affordability report, five of Australia’s most significant housing markets were classified as unaffordable in 2022, with Sydney ranking second only to Hong Kong in terms of unaffordability.

The report uses a ratio to evaluate affordability, comparing median property prices with median incomes. In Sydney, the median house price divided by the median before-tax income resulted in a score of 13.3, while Hong Kong topped the chart at 18.8. Melbourne also featured in the top ten least affordable markets with a score of 9.9, and Adelaide was among the top 20 with a score of 8.2.

The survey encompassed 94 global housing markets, with Pittsburgh in the United States emerging as the most affordable market with a score of just 3.1. Australia’s performance was notably poor, with all five of its largest capital city property markets being categorised as “severely unaffordable” due to scoring over 5.1.

“Australian markets have seen their median multiple rise from 6.9 in 2019 to 8.2,” the report stated. “This equates to an additional 1.3 years of median household income.” It also highlighted that all five of Australia’s major housing markets have been severely unaffordable since the early 2000s.

Australia’s track record in housing affordability has been on a downward trajectory in recent years, with Adelaide’s ranking suffering due to rising house prices. The situation is expected to deteriorate further in the coming years as property prices rebound, despite the highest interest rates seen in over a decade.

Recent figures from CoreLogic indicate that national property prices increased in August, and major banks are forecasting further gains of approximately 7% over the next 18 months. This trend is largely attributed to a persistent imbalance between supply and demand, fuelled by population growth and a scarcity of affordable properties entering the market.

Despite the challenges facing Australian cities, Hong Kong remains the most expensive city, largely due to its limited land area. However, Demographia noted that Hong Kong’s affordability score has improved significantly in recent years.

If you’re looking to navigate this challenging market, consider engaging a Northern Beaches Buyers Agent or a Buyers agent Lower North Shore. These professionals can provide invaluable assistance in securing a property within these competitive markets.

In conclusion, while Australia’s major cities offer many attractions and opportunities, their property markets pose significant challenges for potential buyers. With ongoing supply-demand imbalances and rising prices, it’s more crucial than ever for prospective homeowners to seek professional advice and support, such as that offered by a Sydney Buyers Agent or other local experts. The current state of affairs underscores the need for strategic planning and informed decision-making when attempting to break into or move within Australia’s property market.