Sydney has always been Australia’s most expensive property market, and that doesn’t appear to be changing anytime soon.
A new study from Professor Chyi Lin Lee from UNSW and Mustapha Bangura, a lecturer of property finance at the University of Technology Sydney, has found that Greater Sydney’s property market will remain out of reach for individuals earning a median salary until at least 2031.
The study, which analysed property prices from 2004 to 2022, found that the cost of housing in Sydney is set to continue its steep climb. As it stands, Sydney is already the most expensive city in Australia, with median house prices around $1.4 million. This isn’t just an issue for those on part-time incomes; even full-time workers are struggling to keep up.
When I look at the numbers, it’s easy to see why Sydney feels increasingly out of reach. The study shows that by 2031, the quarterly costs for any type of property – whether it’s a house, apartment, or townhouse – will be unaffordable for anyone on a single median income. This means that the dream of owning a home is slipping further away for many.
The authors of the study compared these predicted housing costs to median full-time and part-time incomes in New South Wales. They found that even those earning a full-time median income would need to spend more than double the ideal percentage of their income on housing repayments.
I’ve seen firsthand how the property market in Sydney has evolved over the years. From 2004 to 2020, there were still some affordable pockets, particularly in Greater Western Sydney where strata dwellings like apartments were somewhat within reach.
However, since COVID, prices have pushed further ahead and are increasingly out of reach for a lot of people.
The entry affordability index, which measures the ratio of housing costs to income, shows that in 2031, someone earning $1,500 a week (the current median full-time income) would face housing costs that are more than 170% of their income in areas like eastern Sydney.
For part-time workers earning $600 a week, the figures are even more daunting, with housing costs consuming around 174% of their income.
The entire study highlights the fact that just because prices are expensive already doesn’t mean that they have to slow down anytime soon.
Arguably, the key driver of property prices across Sydney is the huge growth in population numbers. You just have to take a trip to Western Sydney to see how many people are moving here every year.
With more people coming here daily and the fact that they are not making any more land, we can only realistically expect prices to keep rising. If they increase density through changes to zoning laws, that only increases the value of land.
Fortunately, however, there are things you can do to keep pace. Even if you can’t afford to buy a home in Sydney as an owner-occupier, you might still be able to invest.
Investing is at times easier because you have a tenant who is paying rent and helping with mortgage payments. It also allows you to pay off interest only. In time, your equity will grow, and it will allow you to expand your portfolio.
You might need to rent at the time, but it will mean that you are not falling behind and are on the property ladder.
Housing in Sydney is certainly not an easy situation to manage regardless of your level of income. But the best thing you can do is be proactive and look at creative ways that you can get into the market.
If you want to learn more or are considering buying property, seeking advice from a buyers agency in Sydney who provide local expertise through qualified Sydney buyers agents.
