But then you read this
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The Great Australian Nightmare?
Added by: National
Source: Property Council of Australia
Date Published: 28 April 2006
Added To Web: 01 May 2006
Housing affordability is declining, according to an international survey, which also reveals that Sydneysiders are finding it harder to get into the market than New Yorkers. Stephanie McDonald reports.
The second annual Demographia International Housing Affordability Survey: 2006, charts ratings for major markets from September 2005 in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States.
Demographia is an international public policy firm specialising in demographics, development impacts, market research and urban policy.
The survey reveals Australia has four of the most unaffordable markets in the top 20 – Sydney (7th), Hobart (15th), Adelaide (18th) and Melbourne (19th) – and none in the most affordable housing markets. Perth ranks 23rd, Brisbane 26th, Canberra 45th and Darwin 51st. Australia also rates highest as having the most unaffordable markets, followed by Canada, Ireland and New Zealand.
“The most pervasive housing affordability crisis is in Australia…” the survey says, rating six markets in Australia as severely unaffordable and two as seriously unaffordable.
The method used in the survey is a calculation of the median house price to median household income ratio, with a median multiple of 5.1 and over rated as severely unaffordable, 4.1 to 5.0 seriously unaffordable, 3.1 to 4.0 moderately unaffordable, and 3.0 or less affordable.
Demographia says Australia’s capital cities recorded median multiples in the 1980s of 3.0 or under. Since 1996, that national rating has jumped two full points, and over three points in Sydney.
Using data from AMP Banking, the Australian Bureau of Statistics, the Housing Industry Association, the Real Estate Institute of Australia and the Reserve Bank of Australia, the survey sets the average household income in Sydney at $61,000 and the average house price at $520,000. This results in a median multiple of 8.5, the most expensive market in the country and a severely unaffordable rating.
In Hobart and Adelaide, surprising some with their high rating on the survey, the median household income is $40,100 and $41,700 and the average house price is $266,500 and $272,000, respectively. With all other average house prices over $300,000, these two markets still don’t appear to be overly unaffordable.
Tim Willing, managing director of Multiplex Living at Multiplex, says growth in Hobart and Adelaide can be one reason for the cities’ high rankings.
“Particularly in the case of Hobart, (they) have had very little growth for a long time and then they had a major spurt of growth for a couple of years,” he says.
David Rees, director of research at Mirvac, has witnessed this change. He says the various data he has seen on affordability “show over the past four or five years, affordability in most Australian cities has fallen…”
Rees says Sydney’s high ranking is due to several factors such as higher incomes and a lower supply of land.
“You can go back 150 years and Sydney has always been the least affordable of Australian cities. It’s a function of relatively higher wages in Sydney, combined with … limited access to land,” he says.
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Keen