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Property prices across Greater Sydney are expected to remain out of reach for individuals earning a single median income for at least the next decade.
A recent study assessing housing affordability across Greater Sydney has found that individuals earning the median part-time or full-time income in NSW are unable to afford property purchases without additional financial support, including the ‘bank of mum and dad’.
Published earlier this month in the journal Cities, the study projects Sydney’s housing market from 2022 through to the end of 2031, based on an analysis of market trends from 2004 to 2021.
The study examined current entry affordability of income earners for strata and non-strata property types.The two leading researchers for this study, Dr. Mustapha Bangura (UTS) and Professor Chyi Lin Lee (UNSW) utilised the weighted average of the eight capital cities in Australia, highlighting significant trends in housing prices. According to The Australian Bureau of Statistics (ABS), there was a 23.7% increase in residential property prices between December 2020 and December 2021.
Sydney continues to be the most expensive city in the country for property. Latest figures for the June quarter reported the median house price for Sydney dwellers to be $1.6 million.
The study found that nowhere in Sydney was affordable based on the 2021 NSW weekly median income. Part-time earners in almost all parts of Sydney would not be able to purchase a property, even if they spent their entire salary on housing.
Aside from a minor decline in affordability during the GFC in 2008-2009 and the COVID-19 pandemic in 2020-2021, the researchers found no substantial improvement in housing affordability. Sydney residents will need to “save significantly and for an extended period to keep their dream of owning a home alive”.
A household is generally considered to be in mortgage stress if they spend more than a certain percentage of their pre-tax income, around 30%, on home loan repayments.
Dr Bangura warned of potential consequences if housing repayments exceeding 30% of income become more common.
