The Annual Demographia International Housing Affordability Survey has called the country’s housing ‘vastly overpriced’- but what this actually means is up for debate.
Despite a slight improvement in affordability compared to last year, Demographia classed two thirds of the Australia’s housing market as ‘severely unaffordable’, giving us one of the most unaffordable housing markets in the developed world.
“Sydney is the least affordable, with a median multiple of 8.3. Melbourne has a median multiple of 7.5, Adelaide 6.5, Perth 5.9 and Brisbane 5.8. Each of Australia's major markets, with the exception of Sydney, had housing affordability within the 3.0 median multiple norm during the 1980s, before the widespread adoption of urban containment policies.”
Any score above 4.0 is considered ‘seriously unaffordable’.
According to the report, Australia has one of the most ‘severely unaffordable’ housing markets in the world – not one of the markets studied made the ‘affordable’ or ‘moderately affordable’ categories.
Even rural areas are not immune. This year's survey also includes two principally resource-based markets located in the Pilbara region of Western Australia, ‘in response to reader interest’.
“Despite a large surrounding supply of land, housing is seriously unaffordable in Karratha (4.9) and severely unaffordable in Port Hedland (6.4). Western Australia's ‘Pilbara Cities Blueprint’ seeks ‘to secure the Pilbara’s future long after the resources sector has reached its peak’.
Demographia says this ‘would be a fate far different’ from those suffered by ghost towns like Coolgardie, which fell into decline after their natural resource peaks.
“However, to secure sustainable long-term futures for communities in the Pilbara will require affordable housing, which is highly doubtful so long as urban consolidation policies are in place.”
But, as usual, not everyone agrees.
Australian Property Monitors chief economist Dr Andrew Wilson told Property Observer yesterday that any measures of unaffordability are patently not affecting the market place in terms of buyer activity and price growth.
“So we need to look very carefully at the concept of what is unaffordable...Does unaffordable mean inability to buy, because in Sydney buyers are up and about?”