Written by Dr. Kevin Hoang
By any measure, Australian housing prices are severely unaffordable.
As a rule of thumb, housing is usually considered affordable if it costs less than 30% of gross household income.
According to the latest data complied by Demographia's list of most unaffordable housing markets, Sydney is only below the tiny island of Hong Kong, and well above all major global cities in the U.S.A and around the world. Even the cheapest cities like Perth, Brisbane, and Adelaide, their housing prices are 2 times higher than the commonly-agreed affordable level:
City Price to income ratio:
1 Hong Kong 19.4
2 Sydney 12.9
4 San Jose, USA 10.3
5 Melbourne 9.9
6 Los Angeles, USA 9.4
7 Honolulu, USA 9.2
8 San Francisco, USA 9.1
16 Adelaide 6.6
18 Brisbane 6.3
21 Perth 5.9
Consequently, most of Australian families's budgets are stretched by the costs of housing, which will likely distort resource allocation of individuals, households and the whole economy.
What ordinary Australian people really want to see is more realistic and diverse housing supply that caters for the needs of households at all spectrum of incomes.
Probably Morrison yesterday promised first home buyers would only need a 5 per cent may not sold the problem of affordability, but to buy votes.CityDataAustralia