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by Mina Martin, Article courtesy of Australian Broker
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 “there 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.”
Robert’s comments;
It is unlikely that this longer term trend in housing “unaffordability” will dissipate and it is also unrealistic to think the Government (whoever that might be) can solve the problem for us. They can try and help, but as with most things, once we start relying on Government support to set our destination, we lose a bit of control for ourselves.
So what’s my point? Well, I’m well aware that those in a younger demographic than me, let’s say the 25 to 45 age group tend to “blame” those who are say 55 and above for many of the housing problems they now face. While I don’t necessarily agree with this view, I can sympathise with it.
However, sympathy doesn’t pay the bills, so how can we help? Well for many of us who are fortunate enough to have had a leg on the property ladder for some time, we also have children in the 15 to 25 year age bracket……….and maybe we can start by trying to help them.
So how do we do this?
Well as usual, there are many ways which may assist, with a few of my thoughts being;
Start educating them about money and life’s financial lessons from an early age
Encourage them to get a job and start budgeting as soon as they get one
They need to be careful and not take on too many small personal loans, payday finance, credit cards etc, which can restrict savings and limit their ability to borrow for a home purchase in the future
Don’t be afraid to tell them that sometimes things are tight and you need to go without
Encourage them not to get caught up in media/social trends which are always making us believe we need the latest and greatest gadget, clothing, etc
They don’t need to start at the top, i.e. maybe Sydney, Melbourne, Port Macquarie, etc isn’t the place for them to own their first property
They don’t need to start with a 4 bedroom house with a pool
Consider helping them out, but it’s better to give a hand up, rather than a hand out
Maybe most importantly as with most things in life, tell them that worrying or blaming others about not being able to do or get something, doesn’t actually help them achieve their goal. They actually need to try and take proactive steps themselves………..and the sooner the better.
As always, I welcome any comments if you wish to make contact.