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- January 21, 2015 /
- by Josh Atherton /
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The results are in for the 11th annual Demographia International Housing Affordability Survey 2015 and it is no surprise that Sydney is the most unaffordable city in Australia and has taken third place globally for having the highest median values to median household income, placing the city behind only Hong Kong and Vancouver. Further bad news for Australian home buyers was Melbourne taking 6th place globally. Interestingly the most affordable capital city markets were Canberra, Hobart and Brisbane. Whilst Canberra and Hobart have had relatively low growth over the past five years Brisbane has shown signs of recovery after a rough start to the decade, after performing well in 2014 sales activity has grown to surplus that of 2010 and is set to outperform Sydney and Melbourne over the next few years.
Brisbane, boasting good news for investors, enters into a golden era of increasing growth whilst still maintaining a much lower median value calculated to be approximately 6.0 times the median household income for the city. Sydney and Melbourne, within the top ten least affordable major property markets in the world, are calculated to have a ratio of value to income of 9.8 and 8.7 respectively.
As Melbourne and Sydney have had a surge in growth throughout 2014, yields have suffered as the median house price growth hits double figures, rental growth has been lagging causing yields to show virtually no growth and declining in many locality in the two major capitals. The story for Brisbane is although median house values are increasing at a modest rate yields remain optimistic with 4.5% for houses and 5.4% for units whereas Sydney and Melbourne held 3.6% and 3.2% for houses whilst units held 4.5% and 4.1%. The other capital cities were placed somewhere in between the exception being Darwin and Hobart which achieved slightly higher yields ranging between 5% and 6% to match lower median property values.
While many regional markets were stronger in terms of affordability and still presented growth opportunities, Brisbane holds many advantages such as population growth, high demand markets, infrastructure as well as a higher degree of diversification which can offer advantages for longer term investments. Many regional markets which came out ahead as Australia’s more affordable markets such as WA powerhouses Karratha, Kalgoorlie and Port Hedland which ranked 1st, 2nd and 7th most affordable in the nation due to the high household incomes of jobs in the mining industry. This is set to change over the next few years as the mining boom settles and investment is withdrawn from those areas, therefore stable long-term investments may not survive in the most affordable environments as is the case with many markets located within mining towns.