Prospective Sydney home buyers have been dealt a fresh blow after a new study revealed the situation for single income earners is expected to be dire for at least the next decade.
Research by Dr Mustapha Bangura from the University of Technology Sydney (UTS) and UNSW Professor Chyi Lin Lee, revealed there was nowhere in Greater Sydney where someone earning a median income can afford to buy a property.
This grim outlook is expected to remain that way until at least 2031 if no interventions are made, the study added.
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“We assume that the variables used in calculating entry affordability, including income, lending rate, housing price, and loan-to-value, will follow the 2004-2021 trajectory,” Lee says.
“We also assume an absence of global events such as pandemics during the projected period.”
Additionally, the research found a direct relationship between housing affordability and proximity to Sydney’s central business district (CBD). The closer to the CBD, the more challenging it becomes to enter the housing market.
“The study focuses specifically on Sydney, which may limit the generalisability of the results to other regions,” Lee says.
“Using assumptions in forecasting future trends also introduces uncertainty to the projections.”
The study looked at which areas of Sydney were affordable on median part-time and full-time earnings.
A grim reality was exposed — nowhere in Sydney was affordable based on the 2021 NSW weekly median income for part-time employees of $600.
Even if part-time earners spent their entire salary on housing, they would not be able to find a home in Sydney.
And although the 2021 median income for full-time employees was higher at $1500 per week, nowhere in Greater Sydney was affordable.
“The major consequence of median incomes not being sufficient to enter the housing market in Sydney is that households relying solely on their earnings will have limited chances of achieving homeownership,” Lee says.
“So, it’s clear the Australian dream of owning a home is becoming increasingly harder to attain.”
Significant housing reform is needed to prevent the cost of housing from spiralling further out of reach, Lee said.