Sydney slips, but stays up there with the most unaffordable cities

SYDNEY has been overthrown as the second-costliest city in the world (behind Hong Kong) to purchase a house.

SYDNEY has been overthrown as the second-costliest city in the world (behind Hong Kong) to purchase a house.

But the harbour city remains -- with Melbourne -- firmly in the top five least affordable metropolitan housing markets across the globe.

Vancouver knocked Sydney off its unenviable perch, according to Demographia's survey of 325 housing markets in eight countries. The survey bases its rankings on the ratio of median house prices to gross annual median incomes within metropolitan and non-metropolitan areas. A multiple over 3.0 is considered unaffordable.

"Australia's housing affordability improved from median multiple of 6.1 to 5.6 over the past year," Demographia principal Wendall Cox said.

"Still, however, Australia exhibited the worst housing affordability of any national market outside Hong Kong."

From Cairns to Hobart and from Adelaide to Perth, 25 Australian cities were classed "severely unaffordable" with medium multiples of 5.1.

Median house prices in Sydney are 9.2 times median household income, while prices in Vancouver are 10.6 times median income. Houses in Hong Kong remained the least affordable in the world at 12.6 times median income, while Melbourne ranked fourth in the larger metropolitan areas with median house prices 8.4 times median income.

"Australia's major metropolitan markets have a severely unaffordable median multiple of 6.7 more than two times the 3.0 affordability standard," Mr Cox said. During the 1980s each of Australia's major markets, apart from Sydney, were considered affordable, Mr Cox said.

Brisbane (6.0) and Perth (5.7) were also well above the severely unaffordable threshold, though the report showed housing affordability in Perth had improved considerably since the height of the market in 2006.

"Like Sydney, [Brisbane and Perth have] more restrictive land-use regulation and has seen their housing affordability deteriorate markedly," Mr Cox said.

"[The survey] is dedicated to younger generations who have the right to expect they will live as well or better than their parents, but may not, in large part due to the higher cost of housing."