An international think tank has ranked two Australian cities among the most unaffordable places in the world to buy a house.
The report, which compared incomes to home prices in the third quarter of 2021, was released by the Urban Reform Institute and the Frontier Centre for Public Policy.
The report ranked Sydney as the second-most expensive city to secure a home, only behind Hong Kong; and placed Melbourne, which has been tipped to overtake Sydney’s population by 2030, as fifth, behind Vancouver and San Jose, news.com.au reported.
Report author Wendell Cox said “t. has been an unprecedented deterioration in housing affordability during the pandemic,” with the number of severely unaffordable markets rising 60% in 2021 compared to 2019.
To rate middle-income housing affordability, Demographia International Housing Affordability used the “median multiple” – a price-to-income ratio, which is the median house price divided by the gross median household income.
“The least affordable market is Hong Kong, with a median multiple of 23.2, followed by Sydney at 15.3, Vancouver at 13.3, San Jose at 12.6 and Melbourne at 12.1,” the report said. “The most affordable market is Pittsburgh, at 2.7, followed by Oklahoma City and Rochester at 3.3, with Edmonton and St. Louis at 3.6.”
The results came after Australian home prices increased by a mere 0.3% in March – a sharp drop compared to the past couple of years of market acceleration.
“Those boom conditions seem like they have passed,” PropTrack economist Paul Ryan told news.com.au. “While housing prices are still going up, it’s at a slower rate and whether prices increase or fall significantly is a question around interest rates and when and how quickly the RBA will increase rates.”