Sydney becomes second least affordable city in the world (2024)

For the second year in a row, Sydney has been ranked the second least affordable city in the world, with experts worried Australia’s standard of living will plummet.

According to the Demographia International Housing Affordability 2023 Report released on Monday, Sydney ranked second in terms of housing affordability, with a current median house price of $1.3 million.

While house prices soared, wages in the state averaged $94,000, according to the Australian Bureau of Statistics.

Sydney ranked behind Hong Kong which took the place as the least affordable city in the world, with Vancouver in third place.

Other Australian cities were also highly ranked in the list with Melbourne as the 9th least affordable, Adelaide as 14th and Brisbane as 15th.

Perth was ranked as the 50th.

The report stated all five of Australia’s major cities had been “severely unaffordable” since the early 2000s and has been worsening since.

Median house prices across the nation skyrocketed at an “unprecedented” rate in recent years, driven predominantly by consumer trends brought on by the COVID-19 pandemic.

Since 2020, Adelaide’s house prices rose by 6.1 times the rate of inflation as measured by the Consumer Price Index.

Sydney increased by 6.0 times, Brisbane by 5.2 times, Melbourne by 4.9 and Perth by 4.2.

“As pandemic and lockdowns continued into another year, the movement of households from denser urban neighbourhoods to larger homes, often with large yards (gardens) in suburban and outlying areas, has continued,” the report read.

“The result has been to drive up prices at unprecedented rates in many markets.

“As a result, many low-income and middle-income households who already have suffered the worst consequences from housing inflation will see their standards of living further decline.”

Homeowners battling increasing interest rates were smashed with their mortgage interest rates rising by 26.6 per cent in the December quarter, according to the ABS.

The cost of housing rose by 2.2 per cent, food by one per cent and transport by 1.8 per cent.

Principal of Demographia Wendell Cox said deteriorating housing was an “existential threat” to middle-income households across the globe.

However, he said some developments were starting to be seen.

“Some housing affordability improvements have since occurred and more are likely as the demand shock is hopefully replaced by more normal market trends,” he said in a statement.

The report compared 94 markets across Australia, the United States, the United Kingdom, China, Canada, New Zealand, Singapore and Ireland.