The median rent has now hit one-third of the median pre-tax income after a 4.8% increase in rents in 2024, according to a report by CoreLogic. This rent:income ratio is the highest since the agency started tracking housing affordability in 2006.
Sydney remains the most expensive Australian city for housing, with a median rent of $773. Perth is now in second at $695, followed by Canberra at $667.
Hobart is still the most affordable capital. Melbourne is second.
The 4.8% national increase in 2024 was on top of the record 8.3% increase in 2023. It is still well above the pre-COVID decade average increase of 2%.
The numbers don’t look good stacked up against the political rhetoric of the past 12 months. In November 2023, NSW Premier Chris Minns gave a speech decrying the rent:income ratio in Sydney and promising more high-density housing development.
Along with their campaign to wind back negative gearing on investment properties, the Greens announced a plan for government-run property development in March 2024. And since 2021 Labor has had a plan for a $10 billion “off-budget” housing fund that it brought to the 2022 election.
Clearly, all the talk hasn’t made a dent in the structural causes of the problem.
A 2024 NSW Productivity Commission report found that the financials of a massive expansion of housing supply make little financial sense – from a developer’s perspective, that is. For a new apartment in “a typical mid-rise apartment block”, the report found the cost of delivery went from $660,000 in 2018 to $900,000 in 2023.
Part of this is due to rising construction costs caused by the crowding-out effect. In NSW, public infrastructure construction has increased by 40% since COVID. Private-sector construction has remained flat. Despite record migration there is a shortfall of 30,000 construction workers.
After construction, land acquisition is the second largest cost to developers. “Planning constraints, especially zoning restrictions, make developable land scarce in these feasible areas,” in the words of the report.
In the meantime, as a Nine Newspapers report on Wednesday observed, two young people leave Sydney for every one who moves there. The 30-40 year-old demographic is the most represented in departures.
With cost-of-living front and centre for Australian voters, the most recent Resolve poll has Labor’s primary vote at just 27% in NSW and 25% in Victoria.
Thumbnail image courtesy of @clemono via Unsplash.