Sydney has been ranked the second most expensive housing market in the world, according to a study by research company Demographia. The study ranked Hong Kong as the most unaffordable city in the world, followed closely by Australia’s biggest city.
Demographia’s 2017 International Housing Affordability Survey comes at a time of great concern for the future of Australian housing. Last year, UBS’ Global Real Estate Bubble Index ranked Sydney as the fourth riskiest property market in the world. Melbourne also ranked in the top ten most unaffordable housing markets, with the fifth most unaffordable housing market behind Hong Kong, Sydney, Vancouver, Auckland and San Jose.
While Sydney is Australia’s most unaffordable housing market, all five of Australia’s major housing markets were ranked in the top twenty most unaffordable housing markets. All of Australia’s property markets were rated as “severely unaffordable”.
Demographia’s survey found that only four of Australia’s fifty-four identifiable housing markets could be deemed affordable. These are the former mining areas of Karratha, Port Hedland, Kalgoorlie, and Gladstone. However, the survey found that, without the reliance on the resources sector, these areas would also be unaffordable.
Demographia cited urban containment policies as the cause of Australia’s unaffordability predicament. Urban containment policies refer to strategies that aim to encourage greater density in existing housing areas rather than allowing urban sprawl.
Both Treasurer Scott Morrison and freshly appointed NSW Premier Gladys Berejiklian have recognised the housing affordability crisis, asserting that housing affordability is a priority. Premier Berejiklian said that the housing crisis is “the biggest issue people have across the state”, and plans to unveil policies to deal with the crisis soon. Mr Morrison is considering a government-backed financing model to encourage construction, looking to London for inspiration.