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Do high prices undermine urban sustainability?
Soaring real estate prices are not unique to Australia but an international survey of six western countries has put Australia firmly in the lead as having the least affordable homes.
The survey used median house prices and median household incomes as of September 2005 to compare just how affordable homes are in Australia, Canada, the Republic of Ireland, the UK and US. An affordable median home was judged one that cost no more than three times the median household income.
By that measure none of Australia's capital cities had "affordable" housing and Sydney - long the country's most expensive housing market - was judged "severely unaffordable with a median multiple of 8.5.
Although Perth faired better at 6.1 that still put the city's houses in the "seriously unaffordable" category.
The average for Australia as a who1e was 6.2. That compared with 3.8 for Canada, 4.6 for the US, 5.9 for New Zealand and the UK and 6.0 for Ireland. Although the US median multiple was below that of Australia, six US cities rated far above Sydney as "severely unaffordable". Los Angeles topped the category with 11.2, San Diego rated 10.8 and Honolulu came in third with 10.6.
There were two cities that rated equally as the most affordable in the six countries and both were in the US and both in New York State - Buffalo and Rochester which each recorded a rating of 2.2.
The survey, was a joint investigation by the US public policy consultancy, Wendell Cox and the New Zealand property and investment company, Pavletich Properties Ltd.
According to the researchers, it is only in recent times that median house prices and median income levels broke their historic relationship of "3.0". Now home prices are taking off to "unprecedented levels" they said.
"This is a matter for concern," said the researchers. "Home ownership has played an important role in democratising prosperity in the nations covered in the survey. Widespread home equity, together with the related quality of life, neighbourhood, community and social cohesion benefits make home ownership a 'pillar' of a sustainable affluent economy.
"These benefits are threatened by the high housing prices that are likely to reduce home ownership and household wealth creating capacity. A nation with more renters is likely to be both less prosperous and less cohesive."
What can be done to reverse the trend? The authors argue that it is not "natural market forces" that are pushing up prices but the "negative effects of land regulation".
"The main cause seems to be excessive land use regulation that strangles housing markets and drives prices upwards at rates far higher than can be attributed to conventional economic trends," they claim.
The scan also showed:
More renting
An analysis by the Australian Bureau of Statistics of Australia's soaring house prices shows that it is leading to a significant increase in people renting their accommodation.
In the nine years to 2004, the number of households renting rose from 18% to 21%. During the same period the median value of house prices for the country as a whole climbed 70%. Although the average size of household fell from 2.69 to 2.53, the actual size of their homes increased - from 2.88 bedrooms per dwelling to 3.02. According to ABS, 77% of Australian households now have more bedrooms than required "based on standard occupancy requirements".
Home alone
Britain has just issued a major revision of its predicted population trends showing the between now and 2026, the number of households will rise from 20.9 million to 25.7 million.
That represents a growth of 209,000 new households a year. Just four years ago the country's Office of National Statistics was predicting a growth rate of 189,000. Much of the rise is attributed to additional numbers of people living on their own.
Changing mix
One in four Australians are born overseas but the racial mix is changing, according to the latest analysis from the Australian Bureau of Statistics.
The latest tally shows that in the nine years to June 2005 the largest migrant group came from New Zealand with 140,100. China followed them with 70,000, India with 53,900 and South Africa with 52,000.
