sackofspuds

http://www.domain.com.au/Public/Arti...=NationalIndex

Sydney and Melbourne homes just not affordable

The Demographia international housing affordability report (http://www.demographia.com/dhi-rank200502.htm) ranked housing in Sydney just behind parts of Los Angeles and San Diego as the least affordable in the United States, Australia, Canada and New Zealand.

Melbourne was not far behind, just a little more affordable than New York, while Adelaide, Hobart, Brisbane and Canberra were all ranked among the 20 least affordable cities.

The report covers the USA, Candada, NZ and Oz. Here are some of the income multiples:

Sydney 8.8
San Francisco 7.9
New York 7.1
Melbourne 6.9
Adelaide 6.2
Hobart 6.2
Brisbane 6.0
Auckland 5.9
Canberra 5.6
Perth 5.4
Vancouver 5.3
Seattle 4.9
Chicago 4.7
Wellington 4.1
Darwin 4.0
Toronto 3.9

I've always thought Adelaide, for example, was extraordinarily overpriced in terms of income multiples and the general economic dynamism and this proves it.

G'Day

Very true - but I'm a resourceful gal and will be building my own soon.

Brisben

I think that is a valid point that although some cities are so full you have no scope to build your own,land being like gold dust or snapped up by developers, however some cities do offer this opportunity, as land is available, albiet on the outskirts, thus making a vast difference in opportunities and cost.

G'Day

Yep, especially if you want a decent sized property like me. I'm willing to commute as long as my house is where I want it and decently priced. What REALLY gets my gal is property developers scooping up massive farmlands for 2mil or so, then subdividing in to teensy,weensy little plots on which you can just-just fit a decent house if you're willing to sacrifice a garden. Then they price these plots at $200,000 plus and by the time you've added a house your average sized family home costs you half-a-million or more! They make their money a thousand times over and rob us and the poor farm-owner to boot.

I've heard a little birdie whistle that due to the water shortages the gov might impose new building restrictions forbidding builders to build right up to the building line and restricting the amount of property covered in hard surfaces (tar/paving/house) to a certain amount of space on the property (2/3 I think?). This all to prevent rainwater from ending up in the drains, then the sea, because of run-off from hard surfaces, instead of topping up the underground water-table by soaking into the soil. I doubt that Australians will be giving up their nice big houses so that will at least force developers to allot bigger plots for building.

markeh

Hiya,
I suspect that they would just build in a smaller footront, Underground garage, 2 or 3 stories tall etc. The end for bungalows

Bye
Mark

The Bloke

True. There is a vacant block of land that can fit a normal size house on it a few doors down from where we used to live, was for sale for, wait for it, $450,000. No wonder it has been for sale for over two years.

Land is available near Caboolture, with highway fronting, for about $75,000 per block, but the drawback is that there is really only one road into Brisbane(two lanes) and it is always bumper to bumper every morning and afternoon. This is a common complaint with Brisbane is that the four main roads into the city from each direction is so congested and no thought has been given to the growing population of the area especially in the area of more efficent public transport.

Amazulu

The other drawback is that it is in Caboolture.

tiredwithtwins

ok - can you explain what income multiple is...what does the number next to the city mean?

dont mean to appear thick - give me a human body and im fine - but anything to do with economics and im stuck on the abacus!!

sue

ABCDiamond

The number after the city is the multiple of Median Household Income compared to average house price.

eg: Brisbane is 6.0, therefore if the wage is $50,000 ( x6.0) = "house" price $300,000.

To check your own area "income multiple" divide the value of your house with your income. I'm sure we would get some interesting results

If you check the current average price of Brisbane property using postcode 4000, the median price is $448,000 divide by 6 = $74,666 average household income.

Megalania

The list shows the current desirability of different areas.

Syracuse NY - the earth is firm enough beneath the feet.

Siren & Brian

[QUOTE=sackofspuds]http://www.domain.com.au/Public/Arti...=NationalIndex

[I]Sydney and Melbourne homes just not affordable

The Demographia international housing affordability report (http://www.demographia.com/dhi-rank200502.htm) ranked housing in Sydney just behind parts of Los Angeles and San Diego as the least affordable in the United States, Australia, Canada and New Zealand.


QUOTE]


How ****ing stupid is this, so list the whole of Sydney compared to a few select suburbs of LA.


Compare apples with oranges

ozzieeagle

That list could almost be passed off as the most desirable places to live as well ?? Wonder if that is a factor in the costs ?

How would london compare ?

I also beleive that at one stage, Australia,had one of the highest home ownership rates in the world, Maybe that desire to own a house inflates the price as well.

Plus re building ones own place, or getting it built, It is possible that this route is actually more expensive than buying an established place. I've heard some horror stories about starting from scratch on building. Especially with soil testing and land fall, not to mention Utility companies. Afaik the best value is to buy a newly built place on its first change over.

ABCDiamond

I think you may be correct in that assumption.
Desirability does increase prices. Supply and Demand etc

Badge

Us expats seem to do OK; my income multiple to mortgage debt is 1.5.
On an average income, it would be close to the traditional 3. Healthy!!!

Badge

sackofspuds

Glad you haven't overstretched yourself. However, the report was comparing avg income and avg property prices, rather than avg borrowing vs avg property price.

Of course, lots of Brits will head off with a lump sum from the sale of their UK residence and they'll think they are getting a bargain in places like Perth or Adeliade. However, I've always thought that property in such locations has been grossly overpriced for the last 5 or so years and this report highlights just how overpriced most Australian cities are when you take earnings into account.

Here are some more figures from http://www.demographia.com/dhi-data200502.htm, showing the city, the av. income, the av. house price and the income to house price multiple. The average multiple is 6.1:

City Income House Multiple
Adelaide $40,200 248,800 6.2
Brisbane $50,100 300,000 6.0
Canberra $65,200 361,900 5.6
Darwin $63,000 249,000 4.0
Hobart $39,100 242,300 6.2
Melbourne $54,500 373,800 6.9
Perth $47,300 255,700 5.4
Sydney $57,100 505,000 8.8

Under 10 years ago I know for a fact that in Adelaide you cld buy the kind of house that would now go for $250k plus for around $85k. I'd say this was within 3 x income. Now the property price has trebled but income certainly hasn't.

It's similar in the UK of course.