House prices in Australia are rising at the fastest pace in two decades pushing capital city values to the brink of the $1million barrier.
But in Sydney, the median price for a home with a backyard now stands at a very expensive $1.5million, latest Real Estate Institute of Australia data showed.
Across the capital cities, house prices in the year to September rose by 23.4 per cent based on sales, after the Reserve Bank of Australia cut the cash rate to a record low of 0.1 per cent.
The weighted mid-point price covering Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart, Darwin and Canberra stood at $961,600.
This is the first time since June 2002 that capital city house prices have risen by an annual pace of more than 20 per cent.
House prices in Australia are rocketing at the fastest pace in two decades pushing capital city values to the brink of the psychological $1million barrier. But in Sydney, the median price for a home with a backyard now stands at a very expensive $1.5million, new Real Estate Institute of Australia data showed (pictured is a house at Toongabbie in Sydney’s west)
Sydney house prices went up by an even more severe 30.4 per cent to a very unaffordable $1.499million, with prices rising at an even faster pace than the most expensive cities in Canada and California.
Melbourne values for a home with a backyard surged by 23.6 per cent to $1.073million.
Canberra house prices soared by 22.2 per cent to $895,000.
Despite having a population of less than 250,000 people, Hobart is now Australia’s fourth most expensive capital city market with a mid-point house price of $710,000 following an annual increase of 30.3 per cent.
Brisbane’s median house price rose by 18.5 per cent to $640,000.
Half a million goes further in Perth, where median house prices rose by 8.3 per cent to $520,000 – making it the only capital city market with an annual increase in the single digits.
Adelaide house prices rose by 11.1 per cent to $550,000 as Darwin prices increased by 19.9 per cent to $575,000.
Adrian Kelly, the outgoing president of the Real Estate Institute of Australia, said he was worried about first-home buyers being locked out of the housing market.
‘It is my hope that in 2022 we will see a more normal supply of properties coming to market which will start to ease the affordability issues currently being experienced by first home buyers and tenants,’ he said.
By world standards, Australia is one of the most expensive housing markets when property prices are compared with incomes.
The Demographia housing think tank in the United States rates Sydney as the world’s third least affordable city in the developed world, after Hong Kong and Vancouver.
Across the capital cities, house prices in the year to September rose by 23.4 per cent based on sales, after the Reserve Bank of Australia cut the cash rate to a record low of 0.1 per cent. In Sydney (Kirribilli pictured) house prices went up by an even more severe 30.4 per cent to a very unaffordable $1.499million, with prices rising at an even faster pace than the most expensive cities in Canada and California
But four other Australian state capitals are among the 25 dearest globally.
Hong Kong had the highest price-to-income ratio of 20.7, compared with Vancouver’s 13, Sydney’s 11.8, and Auckland at 10, closely followed by Toronto on 9.9 and Melbourne at 9.7.
In Vancouver, median house prices have this year risen by an annual pace of 24.9 per cent, taking values in Australian dollars terms to $1.8million, data from real estate group Royal LePage showed.
Three of the next four on the Demographia list were in California – San Francisco and San Jose where prices in the US west coast are forced sky-high by well-paid tech workers, then Honolulu in Hawaii and Los Angeles.
In San Francisco, the median house price by 12.1 per cent to $A2.5million, California Association of Realtors figures showed.
Cities with a price-to-income ratio of more than 5.1 are considered to be ‘severely unaffordable’ by the Demographia Housing Affordability Ratings.
The Australian Prudential Regulation Authority, the banking regulator, considers a debt-to-income ratio of six to be risky, where a borrower would struggle to service their repayments.
The Demographia study rated Adelaide as the world’s 13th least affordable city with a debt-to-income ratio of 7.7.
Despite having a population of less than 250,000 people, Hobart (Constitution Dock, pictured) is now Australia’s fourth most expensive capital city market with a mid-point house price of $710,000 following an annual increase of 30.3 per cent
Brisbane was 18th on the unaffordability list with an equivalent ratio of 6.6, with Perth the 23rd least attainable with a debt-to-income ratio of six.
Going by the latest REIA data, Australia’s capital city house price of $961,600 means that even with a 20 per cent deposit of $192,320, a borrower would owe the bank $769,280.
That is 8.5 times an average, full-time salary of $90,329 which would put an individual borrower in mortgage stress unless they were buying with their significant other.
Demographia’s calculations are based on median incomes, which are lower than the average.
In Vancouver, median house prices have this year risen by an annual pace of 24.9 per cent, taking values in Australian dollars terms to $1.778million, data from real estate group Royal LePage showed
New Australian Bureau of Statistics data, released on Tuesday, showed that median male, full-time earnings in August stood at $80,132.
A middle-income man buying a capital city house, with a 20 per cent deposit, would have a debt-to-income ratio of 9.6.
A man buying a Sydney house, also with a 20 per cent deposit, would have a debt-to-income ratio of 15.
If men can’t afford a Sydney house on their own, there’s even less chance for women, who had a mid-point, full-time salary of $71,760.
In San Francisco, the median house price by 12.1 per cent to $A2.5million, data from the California Association of Realtors showed