Australia is grappling with a housing crisis of alarming proportions, as recent reports reveal that Sydney, Melbourne, Brisbane, and Adelaide now rank among the world’s ten least affordable cities. This predicament is underscored by the stark fact that over one-third of homes across Australia are now valued at over $1 million (approximately US$643,000). Just a decade ago, in April 2015, this figure was a mere 10 percent, illustrating a dramatic shift in the housing market that has left many Australians reeling.
Eliza Owen, the head of research at Cotality (formerly CoreLogic), has pointed out that the million-dollar mark is becoming alarmingly “standard.” Median home values in numerous capital cities surpassed this threshold last year, marking a grim milestone in the country’s housing landscape. Owen has noted that even with a budget of $1 million, prospective buyers often find themselves facing the harsh reality of deteriorating property quality and undesirable locations. A recent viral video showcased a rundown property in Sydney’s Mount Druitt selling for nearly $1.2 million, a clear indicator of how the housing market is forcing buyers to either undertake extensive renovations or demolish and rebuild.
The implications of this crisis are profound. In her analysis, Owen emphasizes that only those with substantial financial resources—whether through high income, lucrative property sales, or inherited wealth—can hope to enter the market. This trend has effectively locked out average Australians, exacerbating social inequality and contributing to a rising tide of homelessness and overcrowded housing situations.
The gravity of Australia’s housing crisis is further illustrated by the findings of the Demographia International Housing Affordability survey. This report ranks Sydney as the second most unaffordable city globally, trailing only Hong Kong. Additionally, Melbourne, Adelaide, and Brisbane all secured spots in the top ten. Perth narrowly escaped this dubious honor, with a median multiple of 8.3, just shy of the “impossibly unaffordable” threshold of 9.0. The report highlights a disconcerting trend: in 16 of the last 17 years, Sydney has held the title of one of the least affordable housing markets, now surpassing cities like New York, London, and Chicago in terms of unaffordability.
A significant factor contributing to this crisis is the stagnation of wages, which have failed to keep pace with soaring property values. This disparity has been particularly pronounced in the wake of the pandemic, which saw a housing boom that extended price inflation into regional areas. Without substantial income growth, many Australians find themselves priced out of the market, further deepening the crisis.
Additionally, the report identifies restrictive urban planning policies—specifically urban containment rules—as a significant driver of rising prices. These regulations limit the land available for development, leading to increased competition for the limited housing stock, and consequently, a surge in property prices. Over the last five decades, these policies have made home ownership increasingly elusive for middle-class Australians, correlating with a rise in overall poverty levels.
In contrast, New Zealand’s “Going for Housing Growth” initiative offers a potential blueprint for reform. This policy encourages greenfield development and employs “Special Purpose Vehicles” to finance infrastructure, alleviating the financial burden on governments and making housing more accessible. Implementing similar strategies in Australia could be key to addressing the housing shortage and stabilizing the market.
Looking ahead, the outlook remains grim without urgent and meaningful reforms. The continued inability to provide affordable housing may push residents towards more affordable regions or even countries, weakening the economic vitality of major cities. Some states, notably Victoria and New South Wales, have begun to advocate for higher-density developments near transport hubs, but the effectiveness of these measures in reversing the current trajectory of the housing crisis remains uncertain.
In summary, Australia is at a critical juncture, facing a housing crisis that demands immediate attention and innovative solutions. By addressing the root causes—such as stagnant wages, restrictive planning laws, and inadequate housing supply—there is potential for the country to reclaim its status as a land of opportunity, where home ownership is not a distant dream but an attainable reality for all Australians.
