Sydney Housing Market to Remain Unaffordable Into the Next Decade, Study Finds

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In a recent analysis published in the journal Cities, experts predict that the property market in Greater Sydney will continue to be unaffordable for median income earners well into the next decade. This study, led by Mustapha Bangura, a lecturer of property finance at the University of Technology Sydney, and UNSW Professor Chyi Lin Lee, examines the harsh realities faced by both full-time and part-time workers due to soaring property prices.

The study meticulously reviews Sydney’s property market trends from 2004 to 2021 and forecasts that by 2031, the quarterly repayments for housing will at minimum, double the ideal income-to-housing cost ratio. “While we expected the issue of housing affordability to be severe for part-time employment, we found that full-time employees are also significantly affected,” stated Professor Lee, underscoring the depth of the affordability crisis.

Further illustrating the grim outlook, the study highlights that in 2031, a house in eastern Sydney would demand approximately 170% of the weekly income of a full-time earner, making home ownership a distant dream for many. This gap is even more pronounced for part-time workers, with required repayments near 174% of their income for a house near Parramatta.

“The dream of owning property in Australia is gradually fading, except if you have wealth in other assets or you get financial support from family members,” Dr. Bangura remarked, indicating a shift toward dependency on ‘the Bank of Mum and Dad’ and other financial aids to achieve home ownership.

Michael Fotheringham, the managing director of the Australian Housing and Urban Research Institute, also weighed in on the findings, describing them as a “not a positive picture of improving housing affordability.” He added, “It is not just a problem of high costs but a systemic issue that will take time and substantial effort to address.”

The researchers argue that solving this crisis requires a multifaceted approach involving local, state, and federal governments. One suggested strategy is inclusionary zoning, which mandates or incentivises the integration of affordable housing into new developments.

“This is a long-term challenge that needs our immediate attention,” Dr. Fotheringham emphasized, urging for comprehensive and collaborative efforts to make Sydney’s housing market more accessible.

As Sydney faces this ongoing affordability crisis, the findings from this study highlight the urgent need for innovative solutions to prevent a deepening divide between income levels and housing costs.

References:

https://www.abc.net.au/news/2024-07-23/property-greater-sydney-unaffordable-median-income/104127166