According to an international housing affordability think tank, property prices in the main Australian cities have become severely unaffordable.
In its latest annual report, Demographia revealed that Sydney is the “second worst” city in the world in terms of affordability – with house prices almost 13 times higher than the median household income.
Hong Kong was revealed as the world’s most expensive city in which to purchase a home, with prices coming in at 20 times higher than the average household income.
The survey, which assessed 293 urban markets in nine countries (Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the UK and the United States) during the third quarter of 2017, stated that Australia has one of the most expensive housing markets on the planet.
Renting is cheaper than buying
The study found that Melbourne’s house prices were almost ten times higher than the median household income, and property prices in Adelaide, Brisbane and Perth are currently around six times more than incomes.
And, according to property data firm CoreLogic, property owners in Sydney typically spend 48% of their annual household income paying off their mortgages, while Melbournite’s spend 40%.
The figures for rental properties are less, with households typically spending 29% of their income on rent in Sydney and 26% in Melbourne.
“Rental conditions have also been sublime over the past five years, since rents have kept up with incomes,” commented Tim Lawless, CoreLogic’s research director.
However, Lawless warned people about choosing renting over buying, even if it resulted in more disposable income in the short term, as it would mean sacrificing any potential capital gains made by being a homeowner.
