Analyzing Global Housing Affordability: Where Does Australia Stand?
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The recent release of the 2024 Demographia International Housing Affordability report has shed light on the intensifying global housing crisis, highlighting the severe unaffordability across several international markets, including Australia. According to the report, Sydney is notably the second least affordable market globally, with a median multiple of 13.8. Melbourne and Adelaide also rank high in unaffordability at 9.8 and 9.7, respectively.
Craig Francis, in his article “How does Australia’s dire property affordability compare to the rest of the world?”, emphasizes that while Sydney and Melbourne are not the least affordable cities, they remain significantly challenged. Peter Holle, President of the Frontier Centre for Public Policy, notes, “This deterioration has been the principal driver of the present cost of living crisis affecting the middle and working classes,” underlining the broader socio-economic impacts of such trends.
The global perspective presents a dire scenario in Hong Kong, maintaining its long-standing position as the most unaffordable market with residents needing to save their entire income for 16.7 years to afford a home. The situation contrasts with markets like Singapore, which ranks as the 11th most affordable despite its high cost of living, reflecting a nuanced landscape of global real estate.
Demographia’s findings also reveal a worrying trend in the United States, where severely unaffordable markets saw a significant exodus of residents, particularly during the pandemic. The US median multiple increased from 3.9 in 2019 to 4.8 in 2023, indicating a rise in housing costs relative to incomes.
In the UK, the situation mirrors the global tension between rising property prices and stalling incomes. The affordability median multiple in the UK was at 5.0 in 2023, up from 4.6 in 2019, with London experiencing substantial price increases over earnings. “The current cost-of-living crisis in the United Kingdom has been significantly driven by these house price increases,” Holle pointed out, highlighting the implications of restrictive housing policies initiated during the Blair Labour Government.
The report’s findings underscore a critical need for policy interventions to address housing affordability, a sentiment echoed by Francis and Holle. As global markets grapple with this growing crisis, the effects on young people, minorities, and immigrants continue to be profoundly disparate, suggesting an urgent call for comprehensive housing affordability strategies.
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