A recent report ranked Sydney as the second-most unaffordable city in the world.

However, analysis by Sydney FinTech, FrontYa, has shown that it depends on what data you use.

Sydney housing isn’t as unaffordable as the DIHA analysis suggests, but it’s still considered “impossibly unaffordable”

The Demographia International Housing Affordability Report (DIHA) has been running for 20 years and ranks housing markets based on their median price-to-income ratio (median multiples).

On this basis, the 2024 DIHA report ranked Sydney second only to Hong Kong among over 90 global housing markets for unaffordability. This put Sydney in the “impossibly unaffordable” category according to DIHA’s classification.

Taking a closer look

FrontYa’s analysis, however, reveals a limitation in the DIHA analysis: The median multiple metric combines houses and units in other countries’ data but only uses houses in Australian data.

This skews Australian data towards appearing more unaffordable than other countries given the historical divergence between housing and unit price appreciation.

Rethinking the analysis

FrontYa re-worked the DIHA analysis using both housing and units in the Australian data.

The result is that Sydney moves from the second-most unaffordable city to the tenth-most unaffordable, with a revised median multiple of 9.1 (down from 13.8).

FrontYa’s re-worked housing affordability analysis places Sydney tenth in the world for unaffordability rather than second (source: https://frontya.com.au/insights/is-australia-really-less-affordable)

This is a telling outcome: Sydney is far more affordable on a like-for-like basis than the DIHA analysis suggests. But with a median multiple of 9.1, it still falls in DIHA’s “impossibly unaffordable” category (i.e., a median multiple above 9.0).

Implications of the refined approach

Fortunately, FrontYa’s astute analysis provides a clearer comparative picture of Australian housing affordability.

But that’s where the good news ends—Australian cities, particularly Sydney, are still among the world’s most unaffordable for housing.

Conclusion

While FrontYa has highlighted an important limitation in DIHA’s analysis, Sydney remains an “impossibly unaffordable” city for housing.

As Sydney’s harbour-side location, diverse population and vibrant lifestyle continue to drive its appeal as a global destination, the ongoing challenges of affordable housing see no signs of abating.

Time will tell if policy adjustments or other factors reshape the housing affordability equation in Australia. Until then, the quest for affordable living in Sydney continues.