Bricks and mortar out of reach

Well, that’s according to the latest survey of global residential property, which covers Australia, Canada, Ireland, New Zealand, Britain, the US and China (Hong Kong).

The Demographia International Housing Affordability Survey for 2011 found that bar Hong Kong, Sydney was the most expensive city, coming in at 81 on a total of 82 international metropolitan areas.

Demographia measures affordability as median property price divided by median household income and it comes up with a measure of 9.2 for Sydney.

That calculation is based on a median household income of $66,200 and a median property price in the city of $634,300.

The next most unaffordable Australian city was Melbourne, which ranked at 79 out of 82 on a calculation of a $565,000 median house price and $63,100 median income.

Three times your income is generally cited as an affordability limit. But maybe things aren’t as drastic as they seem.

The local Housing Industry Association does a similar survey on housing affordability. For its latest survey it found Australia’s house price to income ratio was 4.1, quite a bit less than the Demographia result for all Australian markets of 6.1.

But on whatever measure you consider, residential property has become increasingly unaffordable and a difficult market for new entrants to gain access to.

As recently as 1995, when HIA first started its survey, affordability was below 2.5 but it’s since 2001 that it’s started trending upwards, reaching 4.3 just before the GFC.

Different sections of the industry call for different solutions but some include improvements of the rate of land release by state and local governments and changes in the way stamp duty is levied.

In some instances it can be levied up to three times on the sale of a land and home package — sale to developer, developer to builder and builder to consumer.

To ensure home ownership doesn’t become the exclusive domain of the wealthy, this is an issue that needs to be addressed at a national level.