Severe unaffordability due to ‘urban containment’

by Miklos Bolza25 Jan 2017
Sydney is now the second most unaffordable city globally with Melbourne, Adelaide, Brisbane and Perth also ranking fairly poorly.
The 13th Annual Demographia International Housing Affordability Survey looked at 406 metropolitan housing markets in nine countries and found Australia to be one of the most critically unaffordable countries on the planet.
While Sydney was second after Hong Kong, Melbourne came in sixth, Adelaide 16th, Brisbane 18th and Perth 20th.
The report claimed that the high level of severe unaffordability in all Australian markets was due to urban containment – the practice of limiting the development of land outside a predefined area.
Urban containment was “by far and away” the main factor behind the country’s inflated property prices, Hugh Pavletich from Performance Urban Planning (which co-authored the Demographia survey) told Australian Broker.
Land and property prices in these markets are primarily being pushed up as the government strangles the supply of land in capital cities, he said.
“That’s a major problem. Authorities are not responsive enough at releasing land supply to ensure that house and land prices will not inflate.”
Even in cities such as Sydney with physical barriers such as mountains and national parks, there was still sufficient land supply available.
“It’s very odd. A place like Australia has around 24 million people. It is the same size as the United States which has 320 million people yet somehow Australia doesn’t have enough land to build houses on.”
The focus on high density living also inflates house prices, Pavletich said. He warned that Australia could be on the same path as Hong Kong where high levels of unaffordability mean families live in 50 square metre shoe boxes and median house prices are 18 times the average income.
“That’s where they’re taking it because of these failed policies.”
According to the Demographia report, the top ten least affordable cities are:
  1. Hong Kong, China
  2. Sydney, Australia
  3. Vancouver, Canada
  4. Auckland, New Zealand
  5. San Jose, USA
  6. Melbourne, Australia
  7. Honolulu, USA
  8. Los Angeles, USA
  9. San Francisco, USA
  10. Bournemouth & Dorset, UK
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