‘Genuine emergency’: Sydney’s unwanted honour in housing affordability report

A new report suggests the Harbour City now “stands alone” in the cost of housing, a mark one expert says “can’t go on”.

Sydney now “stands alone” as the most expensive city in the world for housing after prices rose to a record median mark last month.

It’s no secret that the Harbour City is one of the most unaffordable places to live on the planet – but new data suggests it may have officially overtaken its perennial rival for the top spot.

The median price for a dwelling – including both houses and apartments – in Sydney hit $1.2 million in May, rising 0.5 per cent in one month.

Sydney may now be the most unaffordable city for houisng in the world. Picture: Sam Ruttyn

As explained by ABC’s finance guru Alan Kohler on Sunday night, that figure is 14.7 times the median NSW wage (which would equate to about $81,000).

This would surpass the most recent score for Hong Kong – which had previously kept Sydney in second place – with a ratio of 14.4, according to research by California’s Chapman University.

“Hong Kong’s house prices are coming down, so Sydney now stands alone,” Mr Kohler said.

“Now it doesn’t really matter how this happened and whose fault it is – it’s a genuine emergency.

“Having the most expensive housing in the world can’t go on.”

Finance journalist Alan Kohler said the situation was an “emergency”. Picture: ABC

One city rising, the other falling

Chapman University’s Center for Demographics and Policy publishes its Demographia International Housing Affordability study each year.

It calculates its unaffordability ratio by dividing a city’s median dwelling prices by median by the median pay of its residents.

Its latest international housing affordability report, released in May, put Sydney at 13.8, but that was calculated before the most recent jump in dwelling values.

“Sydney has had the first, second or third least affordable housing of any major market in 16 of the last 17 years,” the report states.

How prices have grown in Australia. Picture: Supplied

Hong Kong, meanwhile, has been on the opposite trajectory since the Covid-19 pandemic.

“Hong Kong has been the least affordable market in Demographia International Housing Affordability, for the 14 years since its inclusion,” Demographia researchers found.

“However, in recent years there are been material improvement. The 2024 Hong Kong median multiple of 14.4, improved from 16.7 in 2023.

“This is an even greater improvement Hong Kong’s pre-pandemic 20.8 in 2019.”

The 2024 UBS Global Real Estate Bubble Index explained the decline, which had brought prices down to 2012 levels.

“High interest rates, anemic population growth, and a lack of buyer optimism all contributed to weak housing demand,” it said.

‘Impossibly unaffordable’

Anything over a score of nine is deemed “impossibly unaffordable” by Demographia’s researchers.

Its latest report lays out the dire situation for prospective Australian buyers, with the nation’s overall score sitting at 9.7.

Researchers went as far to call the situation in some Australian capitals as “remarkable” when compared to global powerhouses such as London or New York.

“Even the smallest Australian market, Adelaide endures an impossibly unaffordable median multiple of 10.9, ranked 90th among the 95 markets,” the report reads.

Property is getting further out of reach for Australians. Picture: Tom Parrish

“Melbourne, with impossibly unaffordable median multiple of 9.7, is the 87th least affordable. Brisbane was an impossibly unaffordable 9.3 and ranked 85th out of 95.

“Perth at 8.3, was the 82nd least unaffordable market.

“It is remarkable that these markets are less affordable than widely recognized world cities like New York, London, or Chicago.”

Australia’s change

Controversy abounds when discussing house prices in Australia over time, with each generation arguing they faced tough conditions.

The Demographia report stated, however, that Australian property was considered “affordable” in the early 1990s and sat at a score of 2.8.

“As late as about 1990, national price-to-income ratios were ‘affordable’, at 3.0 or less in Australia, Canada, Ireland, New Zealand, the United Kingdom, and the United States,” the report states.

Australia was once considered “affordable”. Picture: Supplied

Mr Kohler cited data from the Australian Bureau of Statistics to show that only two Australian capital cities had seen housing become more affordable relative to incomes over the past decade.

Those were Melbourne and Darwin, where wage growth has outstripped rises in property prices.

“But everywhere else, affordability has worsened,” Mr Kohler said.

“And the cruellest is Adelaide, where housing costs have risen three times as much as incomes.

“Nationally, it’s close to double.”