Sydney housing unaffordable on median income, study finds
New research has found that having a stable and regular income is no longer enough to comfortably enter the housing market anywhere in Sydney. Property prices in the country's most expensive city will be unaffordable until at least the next decade. Dr Mustapha Bangura is the lead author of the study. He says the patterns found in Sydney could be applied to most major hubs around the country
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00:00I just want to explain the motivation of the study, because we saw an increase in the number
00:07of part-time employees, so we look at those numbers and then we start to link these numbers
00:13to entry into the housing markets.
00:16So what we found was astonishing, I mean, there is no way in Sydney we have someone
00:21on a part-time median New South Wales income, will be able to enter the markets, and then
00:26we also did for full-time employees, what we found also was more severe.
00:32So generally, the results doesn't look good, especially for prospective homeowners, because
00:38if you look at the next five to six years, it's becoming very difficult, the prices are
00:43going up, whilst the income is not increasing as much.
00:48So it becomes harder and harder for prospective homebuyers to get into the market.
00:53What is the average wage for a part-time worker?
00:56As of 2021, in New South Wales, it's $600 a week, and then for full-time it's $1,500
01:05a week.
01:06Okay.
01:07Your research also found that by mirroring the theory of full-time and part-time wage
01:12differentials, you found that income supplements like wealth and scaling down housing preferences
01:18played an important role in entering the house.
01:21What did you mean by that?
01:23Did you look at people's inherited wealth or what they could get from the bank of mum
01:26and dad, et cetera?
01:27Yes.
01:28What that means is if you just rely on the median income, it will not be sufficient.
01:33But if you get support, let's say from your parents, which we've had to the bank of mum
01:38and dad, that will supplement your income.
01:40Or maybe if you have investments in other assets, so you can use the gain from those
01:45assets to supplement your median income to be able to get into the housing market.
01:51So these are the supplements that prospective buyers also use.
01:54Okay.
01:55So you're looking predominantly around Greater Sydney.
01:57What did your research find around the country?
01:59The focus is on Greater Sydney, actually.
02:02But I think the findings can also be used in other cities like Melbourne, which is also
02:07similar to Greater Sydney.
02:09Yeah.
02:10So it's something that you can extrapolate perhaps across the country.
02:13Absolutely.
02:14Absolutely.
02:15Because the patterns look similar.
02:16So what do you hope and how do you hope these findings from your research will inform policy?
02:22Let us look at the impact of the findings.
02:25Because if it's becoming too unaffordable, what will happen?
02:32Prospective homebuyers will use the supplements.
02:34So let us say they get into the housing market.
02:36If they've got the supplements.
02:37Yes.
02:38If they've got the supplements, they can get into the housing market.
02:40And for them to sustain the mortgage, they may have to forego other expenses at home.
02:46For example, social and recreational activities.
02:50And also they may have to forego other essentials at home.
02:54So that is going to impact on them.
02:56It will generate what is called housing-induced poverty.
03:01So that will be the impact.
03:02So going forward, I think we need some supply-side policies.
03:06Well, we have the housing accord.
03:08Yes, there is.
03:10We need to fast-track that.
03:11And also we can look at inclusionary zoning, especially for the private developers.
03:18The government can give them incentives.
03:20So let us say for a given block, the government can give them incentives to provide maybe
03:2510 to 20% affordable houses, and then they will allow them to increase the level of apartments
03:33on the block.
03:34Supply-side and zoning are key to this.
03:36Yes.
03:37Yes, absolutely.
03:39Where the problem is coming from, the supply-side, because there is excess demand over supply.
03:45And the housing market is similar to other markets.
03:49If there is excess demand over supply, the price is...
03:52The price is up.
03:53Yes.
03:54It is a vicious cycle, isn't it?
03:55Yes.
03:56Dr Mustafa Bangura, thank you for coming in and explaining your research.
03:58Yes.
03:59Thank you, Cathy.