Sydney and Melbourne among the five least affordable cities in the world: Demographia

Sydney and Melbourne among the five least affordable cities in the world: Demographia
Sydney and Melbourne among the five least affordable cities in the world: Demographia

Housing affordability has improved marginally in Australia over the past year, according to the eighth Annual Demographia International Housing Affordability Survey, but still remains “severely unaffordable” due to restrictive land release policies on city fringes.

Australia's national unaffordability ratio declined from a median multiple of 6.1 (median house price compared to median household income) in 2010 to the still “severely unaffordable” ratio of 5.6 in 2011.  The analysis was done by the self-titled “anti-urban research planning group” of 325 metropolitan markets in Australia, Canada, Hong Kong, Ireland, New Zealand, the UK and the US.

According to Demographia, to ensure housing bubbles are not triggered, housing prices should not exceed three times gross annual household incomes.

“To allow this to occur, new starter housing … must be allowed to be provided on the urban fringes at 2.5 times the gross annual median household income of that urban market,” it says.

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Of the 32 Australian housing markets rated by Demographia, none rate as affordable (a median multiple of 3 or less) or moderately affordable (median multiple of 3.1 to 4).

Seven rate as seriously unaffordable (4.1 to 5) with 25 rating as severely unaffordable (more than 5.1).

The report is typically controversial, with local housing pundits claiming its measures of affordability are inaccurate.

However, Hugh Pavletich, who co-author’s the report with Wendell Cox, rejects the criticism and says the survey methodology is a measure recommended by the United Nations and World Bank Urban Indicators Programs and employed by Harvard University's joint centre for housing.

Sydney remains Australia’s most unaffordable housing market with a median multiple of 9.7. It has fallen below Vancouver and is now ranked the third most unaffordable major housing market in the world, with Melbourne ranking fourth. The list is topped by Hong Kong, with a “staggering” median multiple of 12.6.

Adelaide had a median multiple of 6.7, despite being the major market with the lowest demand in the nation. Brisbane (6) and Perth (5.7) are also well above the severely unaffordable threshold.

“Like Sydney, each of these markets has more restrictive land use regulation and has seen its housing affordability deteriorate markedly,” the report says.

“Housing affordability has improved substantially in Perth since 2006, when the median multiple was eight. However, Perth remains severely unaffordable.”

Each of Australia's major markets, with the exception of Sydney had housing affordability within the median multiple norm of 3 during the 1980s.

The five most unaffordable major housing markets (population of more than 1 million)



Median multiple


Hong Kong












Plymouth and Devon (UK)


Source: 8th Annual Demographia International Housing Affordability Survey

The seven most affordable markets are all regional locations, apart from one, the federal capital Canberra, which has a multiple median of 4.9.

The six other markets are Mildura and Shepparton in Victoria (4.2), Launceston in Tasmania (4.5), Bunbury in Western Australia at 4.6, Toowoomba in Queensland (4.7) and Albury-Wodonga on the NSW-Victoria border with a median multiple of 4.9.

Outside the major metropolitan areas, the most expensive markets are Coff's Harbour (NSW) at 8.4, the Gold Coast (Queensland) at 7.6, the Sunshine Coast (Queensland) at 7.5 and Geelong (Victoria) at 7.1.

The US-based organisation run by Wendell Cox, blames housing affordability problems in Australia, New Zealand, the UK and Ireland on restrictive land release policies

“Australia with its abundant land supply has the most pervasive housing affordability problem In recent decades, housing affordability has deteriorated materially across Australia, Ireland, New Zealand and the United Kingdom, virtually without regard to market size or demand,” says Demographia.

“The causes of massively deteriorating housing affordability are not a mystery. They inevitably result from more restrictive land use regulations adopted by governments with insufficient attention to economic fundamentals.

“This occurs even as virtually all governments profess housing affordability as an important public objective. Where land is rationed (by more restrictive land use regulation), house prices will rise. Thus, where house prices have increased substantially, they have been preceded by more restrictive land use regulation.”

All of the affordable major markets are in the US, while three of the moderately unaffordable markets are in Canada. One of the moderately unaffordable markets is in Ireland, with the other 16 in the United States.

The most affordable major market is Detroit, with a multiple of 1.6.  Atlanta is the second most affordable, with a multiple of 1.9.

The most affordable major metropolitan markets outside the US is Dublin, with a multiple of 3.4, and Edmonton in Canada, with a multiple of 3.5.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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