Can You Afford To Live In Sydney?

Last month, Sydney’s house prices were rated the second most expensive in the world by the Annual Demographia International Housing Affordability Survey, which examined more than 400 cities in nine countries including the United States, United Kingdom, Australia and Canada.
Sydney, which was described as ‘severely unaffordable’, ranked above several other global cities associated with pricey real estate including London, Los Angeles and New York.

The Harbour City’s crippling house prices were second only to one of the most densely populated cities in the world; Hong Kong.

“Sydney is after Hong Kong, which is sitting at 18 times household earnings, as the second worst in the world so it’s just remarkable with the amount of land in Australia that it should have this problem,” says survey co-author Hugh Pavletich, he then goes on to state; “Sydney house prices are about 12.2 times annual household incomes which is grossly excessive”.

Sydney’s home market has been a hotbed for investors and local buyers over the past year with the ten biggest sales alone having a combined value of just under $250 million, Domain reports.

Sydney’s most expensive property was sold in May of 2015 to a Chinese immigrant for $39.9 million.
In that same year, Treasurer Joe Hockey famously found himself in political strife by suggesting that first home aspirants merely needed to find “a good job that pays good money” if they wanted to get into the super-hot housing market.

Unfortunately what Joe neglected to mention was that the average full-time wage for Australians in 2015 was $74,724 – before tax. After tax, the average wage is $57,208.60.

Thanks for the tip anyway Joe but here’s another – why not limit the amount of properties the Australian government are willing to sell to foreign investors and instead help young families who actually live, work and want to bring up their children here a fighting chance to get on the property ladder?

Housing prices have climbed dramatically since 1975, when the average house in Sydney would cost you $28,000.
Today, that same house will cost you $850,194.

That’s 30 times more.

In Melbourne, the average is at 31 times the cost of 1975 at $615,068.
In Brisbane, it’s 27 times higher from $17,500 to $473,924.
In Adelaide, it’s 28 times higher from $16,250 to $459,258.
In Perth, it’s 32 times higher from $18,850 to $604,822.
In Canberra, it’s 21 times higher from $26,850 to $573,326.
In Hobart, it’s 21 times higher from $15,200 to $322,274.

It can’t help pose the questions:
How can this be sustainable in the near future?
Who will be buying in Sydney?
How will families live in Sydney?
Will Sydney be home to a handful of super-rich foreign investors with connections to Macau; paying dividends to James Packer in order to live on the waterfront of Barangaroo? Prime Minister Malcolm Turnbull’s own Point Piper waterfront property is reportedly worth $50million – so one can only wonder how grand that might be since he turned down the traditional Prime Minister’s official residence at Kirribilli House {which itself sits pretty on Sydney Harbour.}

Couple Australia’s crippling house prices with our young generation; who are either out of work or still paying off expensive university degrees that they’re not using because the job market isn’t keeping with the demand of the housing market and you’re suddenly facing a crisis.

“Lower interest rates are also making young people more comfortable with debt and many of them are now saddled with debt on depreciating valued items. But apart from interest rates, young people have also had to pay for university degrees. Add to that internet connection costs and technology devices and you’ve got Generation Y starting their economic lives in debt”.

That’s a big hurdle for anyone to be expected to clear.

Gladys Berejiklian last month replaced Baird as the new Premier of New South Wales, citing her policy priorities as Premier to be:
local infrastructure, housing affordability and building a strong economy, with an emphasis on more jobs.

All eyes are now on Gladys as we eagerly await some relief and hope that the jobs she’s creating meet Joe Hockey’s requirements of, and I paraphrase, “good that pays good ”

If not, I mightn’t be able to call Australia home.

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