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Australia's Housing Market Disconnect

Australia's Housing Market Disconnect

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Australia's Housing Market Disconnect: $300K+ Incomes Needed for Affordable Homes

 In the stark landscape of Australian real estate, our comprehensive analysis of over 22,000 property sales in October 2023 unveils a sobering truth. The global standard for housing affordability, known as the Median Multiple, is a simple yet powerful measure: it is the ratio of the median house price to the median annual household income. An affordable housing market, by this metric, should have a Median Multiple of 3.0 or less, meaning the median home price is no more than three times the median income. Historically, this standard has allowed for broad homeownership across income levels.

 Australia, however, stands at a daunting Median Multiple of 9.1, suggesting that median-priced homes are nine times the average annual income. This figure is starkly at odds with the global benchmark, underscoring a reality where homeownership is drifting out of reach for the average earner. To attain the 'affordable' Median Multiple of 3.0, Australian households would need to earn an average income of $301,769, highlighting a market that favours the wealthy. The analysis reveals that in regions like Adelaide - Central and Hills, for instance, the median income required for affordability is $278,833—well above what most Australians earn.

 The implications of such a market are profound, as homeownership—an integral aspect of the Australian dream—is becoming a distant prospect for many, eroding the middle class and entrenching inequality. The crisis is not merely one of numbers but of societal values, as the housing market becomes a fortress for the rich, leaving the majority grappling with the uncertainty of rental markets and the dream of home ownership ever elusive.

 As the gap widens, the call to action becomes more urgent. Policymakers and industry leaders must address this growing divide with a multipronged approach, including reevaluating urban planning, addressing land supply constraints and fostering income growth. This report is an urgent wake-up call, emphasising the need for innovative solutions to ensure that the Australian housing market remains a realm of opportunity, not a bastion of exclusivity.

 Ref: https://en.wikipedia.org/wiki/Median_multiple

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