A leading economist fears more Australians will delay or have fewer children and be deprived of employment options after Australia was declared one of the most unaffordable housing markets in the English-speaking world.
The grim prediction comes after Demographia International’s annual Housing Report ranked Sydney as the second least affordable city in the world to buy a home.
Melbourne (seventh) and Adelaide (ninth) also ranked in the top 10 least affordable cities for housing affordability.
The research was conducted by Chapman University’s Frontier Center for Public Policy, an independent public policy think tank, which ranked Hong Kong as the least affordable place to live.
The study, which has been conducted over the past two decades, measures housing affordability by comparing median household income using a metric known as the “median multiple.”
Demographia International’s annual Housing Report ranked Sydney (pictured) as the second least affordable city to buy a home in the English-speaking world.
Sydney has appeared in the top three least affordable places to live 15 times in the last 16 years.
The port city was deemed “incredibly unaffordable” in the latest report, with prices 13.8 times higher than average incomes.
Independent economist Saul Eslake fears more Australians are “delaying having children or having fewer children”.
“It forces people to make decisions they otherwise wouldn’t have about where to live,” he said. The Daily Telegraph.
Eslake said more people will be forced to travel longer to and from work, which may prevent them from seeking employment and economic opportunities.
“It can force people to spend much more time than they would choose to commute or, alternatively, it can isolate people from their sources of employment,” he added.
Professor Bill Randolph, director of the City Futures Research Center at the University of New South Wales, believes the cost of housing will stifle economic growth as people will not have enough money to spend on other things.
“The amount of money or debt capital tied up in housing through mortgages is a real burden on the economy and means that capital is not available to spend on other things,” he told the publication.
“If you spend half your money on a mortgage, you don’t spend it on going out, on new clothes or a new car because you can’t afford it.”
Melbourne (pictured) was the seventh most unaffordable city to find a home
The report found that the cost of housing is putting significant financial pressure on most households during the current cost of living crisis (pictured: beachgoers in Bondi, Sydney).
The study, which compares homes in 94 markets across Australia, the United Kingdom, the United States, Canada, Hong Kong, Ireland, New Zealand and Singapore, indicated that the majority of households are struggling with the cost of housing.
“Middle-income households face rapidly rising housing costs, which is the root cause of the current cost of living crisis,” the report states.
“Affordability is disappearing in high-income countries, as housing costs now far outpace income growth.”
“The crisis is primarily due to land use policies that artificially restrict housing supply, driving up land prices and making home ownership unattainable for many.”
House prices across Australia are on average 9.7 times higher than the amount the typical person earns in wages across the country.
This figure is greater than the disparity between house prices and median incomes in the US, UK, Canada, Ireland and New Zealand.
Australia’s top five property markets have been extremely unaffordable since the early 2000s or earlier, the report adds.
Some of the most affordable housing markets according to the report include Pittsburgh in the US, Edmonton in Canada, and Lancashire in the UK.
Australians are battling rising house prices in major capital cities as demand for new homes outstrips housing supply.
Three Australian capital cities were named in the top 10 most affordable, including Adelaide.
The latest figures from real estate website Domain found the median house price in Sydney is $1,627,625.
The median house price in Melbourne is $1,032,020, while the median price in Adelaide is $902,332.
Only 945,554 new homes have been approved across Australia in the last five years and 240,000 homes need to be built each year to meet the target of building 1.2 million homes in the next five years.
The mandate starting in mid-2024 was set by the National Cabinet last year.
To make matters worse, homeowners have been besieged by successive interest rate hikes, with the Reserve Bank raising interest rates 13 times since May 2022.
The current cash rate is 4.35 percent.
Sydney (pictured) has remained a consistently unaffordable city in the world to find a place to live, with the city ranking in the top three least affordable places to live 15 times in the last 16 years.