Demographia: Australia 3rd most unaffordable housing market

The 2021 Demographia International Housing Affordability Survey has been released and, once again, it ranks Australia as having one of the most expensive housing markets out of the countries surveyed.

This year’s report assesses 92 major markets (metropolitan areas) in eight nations for the third quarter of 2020. The nations assessed are: Australia, Canada, Hong Kong, Ireland, New Zealand, Singapore, United Kingdom, and the United States.

The survey employs the “Median Multiple” (median house price divided by gross annual median household income) to rate middle-income housing affordability. This measure is widely used for evaluating urban markets, and has been recommended by, amongst others, the World Bank and the United Nations, and is used by the Harvard University Joint Center on Housing.

The Survey ranks urban housing markets into four categories based on their Median Multiple, from “Affordable” (3.0 or less) to “Severely Unaffordable” (5.1 & Over) [Table 1].

Demographia median multiple methodology

Median multiple: Median house price divided by median household income

According to the Survey, housing affordability remained poor across most major metropolitan markets in 2020, as illustrated in Table 2:

Demographia housing affordability summary

Australia is ranked the third least affordable nation with a median multiple of 7.7 in 2020.

Hong Kong is ranked as having by far the most unaffordable housing, with a median multiple of 20.7. New Zealand is the second most unaffordable market with a median multiple of 10.0, followed by Australia (7.7), Canada (5.4), Ireland (5.4), UK (4.8), Singapore (4.7), and the USA (4.2) round out the rankings.

Sydney (11.8) and Melbourne (9.7) are ranked as the third and sixth most expensive major market out of the nations surveyed by Demographia.

Demographia also shows that housing affordability, as measured by the median multiple, has deteriorated across all nations over the past 30 or so years (see Figure 2).

Housing affordability across nations

Median multiples have grown significantly across all nations over the past 30 years.

Demographia blames this cost inflation on increasingly restrictive planning practices and land-use regulations:

A considerable body of research associates worsening housing affordability with the implementation of stronger land use regulation. At the same time, many housing markets have adopted perhaps the most stringent land use regulation, urban containment at the housing market level, which is associated with substantially higher land costs…

The largest housing affordability differences between major metropolitan areas arose as significant restrictions on urban fringe housing development were applied.

It is fair to say that the structural decline in interest rates across the globe has also driven the rise in median multiples generally over the past 30 years, given it allows a larger amount of debt to be serviced for a given income.

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  1. reusachtigeMEMBER

    I am extremely disappointed that we didn’t move from second most valued houses to first.

    • Reusa, you will get your wish, soon enough. The December report from Frydenberg’s fake “Centre for Population” demands a future net migration stream of 235,000 annually, three times the historical average. Labor doesn’t care.

    • They’re not really “sitting on wealth” though, are they? Most of them are just sitting in their homes, which have been blown into what may be one of the worlds great bubbles. They’re not wealthy per se, it’s simply we’ve managed to make such a joke of the market.

      • They are sitting on family size homes. They have pushed for ever rising house prices. Time for them to downsize and release the inflated wealth they have helped to create. They can’t have it all. Maybe they should see the reality of living in apartments, like so many have been forced into. Enjoy the noise, the nuisance from neighbours and other owners, enjoy the faults that come with new builds.

        Maybe high house prices isn’t that great in reality.

      • Yeah all i am saying is, thanks to house prices rising, the youth dont have money for themselves now. Time for the youth to support aged with higher taxes is a far stretch.
        I guess if the aged cannot support themselves with their assets now they’ve just got to go without or perhaps vote for lower house prices for the young.
        Consistently voting for franking credits and negative gearing all their lives and then turning up at 80 going “well its not my fault.. im only a home owner” is a special kind of gaslighting that frankly after shutting down an economy to keep the oldies breathing, i feel isnt the time to suck more out of the youth.
        Noones got patience for that now. Especially when you can clearly print 100s of billions and still support rorts like super tax rorts and neg gearing and franking credits. It seems to be that the old get all the discounts through the back door but demand higher funding for their care through the front door of higher taxes.
        Sorry if the hard work you’ve done all your lives cannot support you then maybe you never really worked so hard and dont deserve a decent old age??
        It is the same message given to the youth for newstart payments that arent even as hugh as the pension… maybe the old shouldve worked harder and “gotten a better job”? Hows that for some reverse gaslighting?

    • Boomers have voted for ever rising house prices – time they paid for their unrelenting cheering on of housing unaffordability.

      • Ailart SuaMEMBER

        “Boomers have voted for ever rising house prices”

        Do you really believe any other generation would have voted differently? It’s not as if the boomers would have been aware at the time that donor-led policies would result in their children and grand children’s demise.

        I’d say one of the last things we need is divisiveness among the generations, Chase. We have a political system that lives and breathes it – and politicians and elites that rub their hands together with glee as the peasants squabble among themselves with nary a thought about those who created the bad policy. Our system only permits a choice of two governments and both of them and their common cash-cows governed under the same housing policies.

        To highlight the absurdity of the boomer ‘hate’ nonsense; think about someone born on December 31, 1964 (boomer) and someone born on January 1, 1965 (gen x). Do you get my point? Or maybe you have predetermined birth dates, outside of the official generational cut-off dates to indicate where the ‘hate’ takes effect. Please, let me know the date if you do, so I’ll know to take extra care when standing at the top of the stairs, or crossing a road.

        Divisiveness is one of the most destructive forces on the planet. What the citizens of the world need right now; more than any other time in history, is unity.

        • So much gaslighting in this. Unbelievable.

          >> Do you really believe any other generation would have voted differently?
          Nope i dont. People are selfish. But any other generation that voted exactly the same way would deserve exactly the same answer. I would love for any other situation where one person in a position of power said the same to another.. lets try it out!
          “I raped her but if you were in my position you would’ve done the same”
          “I stole because i couls but if you were in my position you wouldve done the same!”
          Yeah makes it right does it?
          Plus the youth are being told the same right now: sorry cant pay more for newstart and we have shut down economies for the old putting yoo out of work and newstart is actually not even the same as pension for the old people.. but hey! We want to now raise taxes on the little income you can earn to pay more for aged care for the old people!
          Just have a quick think how that lands on today’s youth.

          >> We have a political system that lives and breathes it
          Created and voted for decades by exactly the same people that benefitted so greatly from it.

          >> To highlight the absurdity of the boomer ‘hate’ nonsense; think about someone born on December 31, 1964 (boomer) and …
          That is just some nonsense about dates to somehow make a technical point. What you’re doing there is an example of someone trying “be right instead of making things right”. Noone cares which arbitary line across the choronology you place a generation. It is a sliding scale of benefits. The older you are the better you had it and the worse you left tomorrow for the next gen.

          >> Divisiveness is one of the most destructive forces on the planet.
          Yes it is. And causing division between yourself as “haves” and future generations to be “have nots” is a very destructive force in the society. So why are you pointing out the obvious? Even by your own logic the right thing to do here is to close the gap on the divisiveness that exists today and NOT keep taking from the young to give to the old.

          But hey, now that voting for higher house prices is done with, all the super wealth accumulation rorts are already in the bag, franking credits is also supporting them and pension is already higher than the youth.. and NOW MORE IS NEEDED to create a divide between the old and the young, sure lets now cart out some leftist sh1t about “divisiveness is baaadd”.. coz you know, the young are woke lefties and they’ll eat that up.. even though literally every single thing that got us to this place where the country is divided into the haves and have nots is a consequence of the decisions made by these same people.

          No. Thats enough gaslighting. If there’s not enough money to raise the newstart to even the rate of pension, there isnt money to pay for aged care. Simple as that.
          Enough of this one rule for the old and another for the young. As someone once said “divisiveness is baaaadd”.

          • Ailart SuaMEMBER

            The hatred you bear is intense, Divya, frighteningly similar to the hatred that permeated Germany in the 1930’s. My advice would be to seek professional help to manage your misguided anger, jealousy and hatred towards a large, but aging sector of the community; most of whom worked their arses off for most of their lives.

            Hopefully, if the professionals can solve your issues – and I genuinely hope they can, you might then be able to channel all that vitriol and wasted hate energy into doing something constructive with your life, instead of blaming others for your woes.

            And any anger you might have left, take my advice and direct it to the one’s who really stuffed Australia. The LNP, ALP and their common elite donors.

        • Again with the “this seems to be a problem with you.. get over it or get help. Dont blame us for rigging the game against everyone but ourselves.”
          Im amazed you are just now frighetned at the hatred against this constant oppression.. but say, have you been living under a rock while Trump, BLM, attempted capitol coup and wall street bets have happened? I am curious, what IS the weather like there on your planet?
          Just stop asking for more is all im asking of the greedy people. Like honestly.. there has to clearly be a limit on how much you can decently suck out of the system.
          If the aged worked so bl00dy hard, then they should be able to use the fruits of their hard work to support themselves right?? Surely the aged followed their own advice and got a better job.
          Or is it really only the young that should get a better job if they cant afford a roof over their heads?
          I cant even believe the PM would even ask for higher taxes. It should be embarrasing right now for the aged to even think about asking for more sacrifice from the young. In a way I am embarrased FOR the aged that after all this and where we are right now the PM shows up cap in hand asking for more!

          But you know, we are now at a point where the voted govt looks past regular corruption and rorts in public grants for their own good, looks past serious allegations of [email protected] in their mix, looks past links in their party to a commy govt. It is led by a PM who high tails it to Hawaii when the country is burning and blatantly washes his hands of international quarantine responsibilities in the middle of a pandemic.
          So clearly they are shameless and this whole “lets scrouge the young more for the old” is another shameless idea.
          The old should be ashamed of where this country is right now. The young should be demanding compensation for all of this but very least, we should expect them not to shamelessly ask for more and more!
          There is no reason for newstart to be lower than the pension after just printing 100s of billions to save the old from a pandemic. Think about that.. if you are unemployed all your life, as a young person you recieve less on newstart until the day you turn old and get the pension which is suddenly more! Off course now you can just claim “i worked my a$$ off all my life”.
          And no i dont think this anger requires professional help. The young have the right to be angry and if anything, the young arent angry enough. The young need to be angry to wake up from the slow doses of debt her0-in we have been fed by the generations past. This could have been a vibrant country and now it is just a debt junk1e town.

          And yes there is anger directed at the govt parties as per above but just because the old are only part of the problem doesnt mean they dont take the blame for the hand they had in it. And if the issue at hand was the pollies asking for a payrise, same would ensue for them. But what you are doing there is just “whataboutism”.. “yeah we had a part in it but whatabout the political parties.. blame them. Look there, a distraction from my role in this!”

          But sure, go ahead and ignore actually engaging in the issue and just say “oh if ur upset, go see a professional”. It is almost as pathetic as “i spoke to my wife jenny”.. externalising the empathy to some other person. MB has called out the lack of empathy from the PM many times before. Maybe it is a generational thing.

          • Ailart SuaMEMBER

            The sad and frustrating (for me anyway) aspect to this conversation, Divya, is that, myself; a 70 year old Australian and yourself; probably around half my age, is that we are both very much on the same page regarding the abysmal treatment of our young and future generations by both of the two governments our primitive political system allows us to have. I’ll take the liberty of including two additional concerns I have – the environmental welfare of both Australia and planet Earth.

            Divya, the reality is, you have no idea who I am, or what I’ve done over those 70 years, however, you can take this as gospel, I’ve done a lot and seen a lot, far more than your average 70 year old. I’ve associated with pushers, thieves, priests, youth-workers, politicians, shady lawyers, business elites and accused murderers. I’ve had the arse hanging out of my pants and I’ve also lived the high life. I’ve performed on stage, I’ve produced, I’ve shovelled horse and chicken manure into bags to supplement a struggling muso’s meagre income and I’ve owned and operated night clubs and take-away health food outlets. I also held a senior marketing position with a large national finance and insurance institution – to which I walked away from in disgust. I should add, I haven’t voted in 40 years – simply turned up and had my name crossed off – and I’ve never taken advantage of any taxation bribes that disgraceful governments have been vigorously deploying to buy votes from the world’s largest generational demographic.

            Hopefully, Divya, you might one day read the book I’m well on the way to completing – and who knows, if anything transpires from it; that is, enough young people read it; unite and follow through with my concept, the young and future generations one day might experience the benefits of living under a genuine democracy and quality government leadership – completely free from the interference of elite ‘cash givers’.

            BTW, the focus of my book, is a completely new system for selecting governments. A system that has the essential ingredients (quality people, integrity and accountability) to deal with 21st century issues and beyond.

      • Not this one, nor my friends nor most family. As for “voting for it” both sides of politics has been complicit in pushing up house prices, so no choice. The last election was the best opportunity ever for the bigger cohort of younger people who now out number boomers to put Labor back in, who’s manifesto was to overtly screw the beneficiaries of franking credits and house price inflation. Far too many of you voted LNP.

  2. United States …

    U.S. mortgage rates jump by most in nearly a year: MBA … Reuters

    https://www.reuters.com/article/usa-economy-mortgages/u-s-mortgage-rates-jump-by-most-in-nearly-a-year-mba-idUSN9N2HQ05G?edition-redirect=uk

    (Reuters) – U.S. mortgage rates jumped by the most in nearly a year last week to their highest level since July on the heels of a surge in Treasury bond yields, which are moving up on expectations of an economic rebound in the months ahead as coronavirus vaccines reach a larger share of Americans.

    The contract rate on a 30-year fixed-rate mortgage, the most popular U.S. home loan, rose by 0.15 percentage point to 3.23% in the week ended Feb. 26, the Mortgage Bankers Association said on Wednesday.

    That was the largest weekly increase since last March and marks the fourth straight weekly rise in borrowing costs. With the increase, mortgage rates have risen 0.37 percentage point from their record low of 2.86% early this year. … read more via hyperlink above …

    • New Zealand …

      Crunch time for deferred mortgages … Jonathan Milne … Newsroom / Stuff NZ

      https://www.stuff.co.nz/business/300244312/crunch-time-for-deferred-mortgages

      … extracts …

      The Finance Minister is worried about the risk that interest-only home loans pose to the country’s financial stability – and that’s just the half of it. …

      … Last week’s annual Demographia report into house prices in major cities listed Auckland as one of the five least affordable cities in the world to buy a house; it would take 10 years for the average worker to earn the price of a house in the city. …

      … The Government has promised a comprehensive housing package later this month, comprised of both supply-side changes being led by Housing Minister Megan Woods, and demand-side fixes being led by Robertson. … read more via hyperlink above …
      .
      .
      Auckland fourth least affordable city for housing among world (major … 1m ) cities – 2021 Demographia report … Stuff NZ

      https://www.stuff.co.nz/life-style/homed/housing-affordability/124367729/auckland-fourth-least-affordable-city-for-housing-among-world-cities–2021-demographia-report

      … With the housing issue being a major concern of 53% of New Zealanders … about 16% of Australians and 14% of the British …

      … Watch as New Zealand’s dilatory and deceitful Ardern government drives young, aspirational and desperate New Zealanders across to Aspirational Australia … particularly the more affordable regional centres … in droves …

      The IPSOS New Zealand Issues Monitor – November 2020 (pdf)

      https://www.ipsos.com/sites/default/files/ct/news/documents/2020-11/12th_ipsos_new_zealand_issues_monitor_nov_2020.pdf

      China’s Focus on Bubble Risks Is a Warning Sign for Stock Market … Bloomberg

      https://www.bloomberg.com/news/articles/2021-03-02/china-s-focus-on-bubble-risks-is-a-warning-sign-for-stock-market

      … extract …

      … Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission and Party secretary of the central bank, didn’t mince his words. “From a banking and insurance industry’s perspective, the first step is to reduce the high leverage within the financial system,” Guo said at a briefing in Beijing. Speculation in the property market is “very dangerous” and bubbles in U.S. and European financial markets may soon burst, he said.

      “His talk shows a willingness to tolerate higher rates,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong. “This is a confirmation of monetary-policy stance tightening. That’s important.” … read more via hyperlink above …

      • New Zealand: Now … rapidly starting on the path of reaping the economic consequences …

        ‘Gale force’ economic warning: what 1% rise in mortgage rates would mean … Tom Pullar – Strcker … Stuff NZ

        https://www.stuff.co.nz/business/124438249/gale-force-economic-warning-what-1-rise-in-mortgage-rates-would-mean

        Mortgage lending has “gone bananas”, leaving Kiwis sitting on a massive pile of debt with a low interest rate on it, ANZ chief economist Sharon Zollner has warned.

        Now, just a 1 per cent rise in mortgage rates would slash 5 per cent off the disposable income of Aucklanders, she said.

        The latter figure would be about 3 per cent in the rest of New Zealand, she said.

        Zollner described that as a “gale-force headwind warning”. …

        … “It is not just houses in New Zealand, this is a global issue,” she said.

        “If you misprice something for a long time, people will demand the wrong amount of it. And I would say ‘risk’ has been mispriced deliberately for a very long time.”

        The message for 20 years had been “central banks have got your back”, Zollner said.

        “People say to me ‘the Fed won’t let equities fall’ or ‘the Reserve Bank won’t let house prices fall’, as if central banks are omnipotent, and that fails the ‘too good to be true’ test. … read more via hyperlink above …

  3. 3rd? Pathetic, as usual, Australia settling for mediocrity. A bit more stimulus, a few more grants programs, we can be #1!!!

  4. We need a Federation moment where we discuss and decide what we want Australia to be.

    Like then deciding we didn’t want great wealth disparity, like the US, or an unfair class system, like the UK – now we need to discuss if we really want affordable housing, or be honest and make a declaration that we are more interesting in ever high house prices.

    If government wants to support ever high house prices, it’s time both sides of government make this declaration so everyone knows what we are up against.