House prices: Sydney’s shame after staggering surge

Alarming new statistics spell bad news for up and coming homebuyers, with the Harbour City reaching new global highs.

Australian housing market has soared 17.6 per cent over the first nine months of 2021, with the nation’s annual growth accelerating at rates not seen since June 1989.

New statistics from Oceania property database CoreLogic revealed the national home value index rose by another 1.5 per cent in September alone, putting Sydney comfortably inside the world’s top three list of most unaffordable cities for real estate.

Sydney’s median house price has jumped almost $300,000 over the past year to surpass $1.3 million for the first time.

The new milestone puts the average house price over 14 times higher than the nation’s average full-time salary ($90,300).

“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers,” CoreLogic’s research director Tim Lawless said this week.

“Sydney is a prime example where the median house value is now just over $1.3 million. In order to raise a 20% deposit, the typical Sydney house buyer would need around $262,300.

“Existing homeowners looking to upgrade, downsize or move home may be less impacted as they have had the benefit of equity that has accrued as housing values surged.”

The new data comes after recent Finder.com.au survey found a majority of polled economists expected the big four banks to lift their standard lending rates out of cycle with the Reserve Bank within the next 12 months.

In order to raise a 20% deposit, the typical Sydney house buyer would need around $262,300.

“The slowdown in first home buyers can be seen in the lending data, where the number of owner occupier first homebuyer loans has fallen by -20.5% between January and July,” Mr Lawless continued.

“Over the same period, the number of first home buyers taking out an investment housing loan has increased, albeit from a low base, by 45%, suggesting more first home buyers are choosing to ‘rent vest’ as a way of getting their foot in the door.”

In comparison, wages in Australia have grown by just 1.7 per cent in 2021.

Australian housing market has soared 17.6 per cent over the first nine months of 2021, with the nation’s annual growth accelerating at rates not seen since June 1989.

On a global scale, only Hong Kong and Vancouver have higher cost of living, according to the Demographia Housing Affordability Ratings. Sydney (third) and Melbourne (fifth) are the only two Aussie cities on the list, with New Zealand’s Auckland placing fourth in front of Toronto.

Cities with a price-to-income ratio of more than 5.1 are considered “severely unaffordable”.

Hong Kong recorded a staggering price-to-income ratio of 20.7, over seven points higher than Vancouver's 13.

Adelaide came in as the world’s 13th most unaffordable city with a debt-to-income ratio of 7.7. Brisbane placed 18th 6.6, with Perth ranking 23rd with a debt-to-income ratio of 6.

When factoring in all metropolitan areas of Australia, the nation scores a 7.7 overall, with the combined median price for capital city properties coming at $751,014 in August.

This followed a national 18.4 rise in the country median property price last month, which took median values across the country to $666,514.