Australian Housing Market Rated As ‘Severely Unaffordable’

For generations and generations, most of us were taught from a very young age that you must start saving to buy your own home. Owning your own home by the time you were thirty was the dream.

My parents in particular got me on the saving spree in the very early days and would be most disappointed if I hadn’t saved 30% of my pocket money weekly. I still remember coming home one day at fourteen years of age after a teenage shopping spree- a result of indulging in far to many episodes of Beverly Hills 90210, where they chastised me for being so frivolous and made me return half of the items.

But never did I think that despite accumulating substantial savings over the years and making considerable adjustments to lifestyle, that the dream of owning a home would become elusive by the time I reached my late 20’s but certainly now in my early 30’s. Sure we all need to make certain sacrifices and adhere to certain budgets in line goals and family responsibilities, but not to the degree you need to now, and it doesn’t appear that in doing so guarantees you a property at all.

The recently released Demographia International Housing Affordability Survey named Australia as the third least affordable housing market, behind only New Zealand and Hong Kong.

The New Daily reported that Sydney was by far the least affordable city in Australia, and the second least affordable of all the 92 cities and regions covered; Melbourne, Adelaide, Brisbane and Perth were the fifth, sixteenth, eighteenth and twenty first respectively.

Australia’s overall median multiple was 6.6 – which means the average Australian house costs the equivalent of 6.6 years’ annual income.

To be classed as affordable you need a score of 3 or less. Anything over 5.1 counts as severely unaffordable.

Melbourne’s median multiple was way over that at 9.9, while Sydney’s was a shocking 12.9.

So how on earth are generations from Baby Boomers and beyond who aren’t already existing property owners going to get a bite?

My parents purchased their first home at age 25 in 1976, a four-bedroom townhouse in Willoughby on Sydney’s North shore for $52,000. With their combined salaries, they paid the whole house off in 2.5 years. The median price for the same style of house in that area today is just over $2,500,000 according to Domain data.

With the ongoing uprise in living expenses, combined with the time it takes you to finish a university degree, get a job, earn a good salary, and pay rent and so on, how on earth do you get a foot in the door now?

I’m concerned that one day I will have to say to my children, make sure you save all your money so you can pay your RENT!

Yes that’s right, RENT. There are so many new budgeting tools that the banks are making available now to assist with saving for home deposits or savings in general, following 70, 20, 10 rules, or 80, 10, 10 and so on, however taking into account the above, in addition to the longing to reside in a suburb that’s close to the city center or work; has great schools and facilities; and a good transport system; well is almost becoming near impossible.

Unfortunately home ownership is becoming elusive and although one might need to sacrifice the $10 avocado smash in the morning to save a bit of extra money, it appears as though doing so will have little or no impact whatsoever on the ability to own a home in an inner suburban area, and will probably most likely just make you miserable. Buy the toast I say!