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Date Published : Thursday, August 07, 2008
A slump in property values in the United States has seen Sydney become the least affordable city in the world in which to buy a home, according the latest report from thinktank the Institute for Public Affairs (IPA).
The study, which includes data from US consultant Demographia, also ranked Melbourne, Perth, Brisbane and Adelaide in its top ten of the most unaffordable cities across the globe, news.com.au reports.
IPA's data found that average house prices in Sydney are now eight times bigger than average household incomes in the city, meaning borrowers face an uphill struggle to secure a home loan.
Dr Alan Moran, the director of the thinktank's deregulation unit, said prices in Sydney have been inflated by "misguided" laws that have limited the availability of land for the development of new properties.
This has increased the cost of building new homes for developers, while other policies have increased the bureaucratic process for gaining permission to build.
"These measures are preventing all but the most affluent young buyers from getting a toehold in the housing market," he said.
"It is clear that regulatory restrictions are fuelling the high cost of building new homes."
The findings come after a recent report from the Australian Property Monitors found that Sydney experienced a 2.1 per cent fall in house prices over the three months to June 30th due to continuing affordability problems and high interest rates.
Overall, the study added, the Australian housing market was in its weakest condition since 2004 in the second quarter of this year.
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