Housing in Australia: Sydney rated world’s second 'least affordable' city

A new finding suggests that incentives have failed to attract property developers to build affordable housing in Australia’s most overpriced market. Sydney was named world’s second “least affordable” city behind Hong Kong.

Records show construction of only 1,287 affordable homes or about 0.5 percent of total supply in eight years. Such finding is contained in a study by the Australian Housing and Urban Research Institute (Ahuri). It comes amid efforts by the New South Wales government to combat Sydney’s housing affordability crisis.

Katherine McKernan from Homelessness NSW said the new study was a sign of failure in efforts to tackle housing affordability. “The approach that’s taken thus far clearly isn’t working, even in an environment where the economy is going well,” The Guardian reported McKernan as saying.

For the research, the various ways inclusionary planning systems stimulate new affordable housing construction in NSW, South Australia, the United Kingdom and United States were analysed. In 2015, South Australia introduced a requirement that 15 percent of housing in key residential developments be made affordable upon rezoning.

The system reportedly resulted to the construction of 2,009 homes with another 3,476 that’s currently in development. It accounts for around 17 percent of all housing output in SA.

Sydney’s housing affordability issue

The cost of home rent has not changed in some parts of Sydney in the past year, but rentals in far flung areas such as Central Coast, the Blue Mountains and Sydney’s west recorded some of the biggest jumps in price across Greater Sydney in the three months to March. A new report shows that Central Coast rents increased at 5.9 percent, its strongest annual growth since 2011.

This is according to the Domain Rental Report March 2018. Those in the Blue Mountains would have felt the largest pinch over the last quarter with rent prices rising by 4.7 percent.

The price of house rent in the Sydney’s city and eastern suburbs, south, upper north shore remained the same. According to experts, the increasing cost of housing was spilling over into fringes in Sydney because people who were priced out of inner city markets were starting to compete for the last frontier of affordable homes.

Domain Group data scientist Dr Nicola Powell said tenants opt to move out further in order to get more value for their rent. “It really does reflect what we’re seeing in terms of the population of Sydney and the migration to the lower-priced markets,” she added.