The Unaffordability of Sydney: An Impending Exodus?
Sydney, Australia, is a beautiful city, but its real estate market presents a significant challenge to those who want to live and settle there. As the second most expensive property market globally, the dream of home ownership is becoming increasingly unattainable for many. This raises serious questions about the city's future and its ability to retain its population.
The Deposit Dilemma
The cost of housing in Sydney is so prohibitive that for an 18-year-old starting to save for a 20% deposit on a house, it could take 46 years. This means most of their working lives would be dedicated to simply accumulating the deposit, even before considering mortgage repayments. The stark reality is that housing is unaffordable for individuals on the median income, even in areas an hour outside of the city center.
A Potential Exodus
The unaffordability of housing could lead to a mass exodus from Sydney. If the youth and working class cannot afford to buy homes, they are likely to seek more affordable living options elsewhere. This could result in a significant population decline, potentially in the hundreds of thousands or even millions, as people move to other states or more affordable regions.
The Consequences of Population Decline
Such a substantial population loss could have dire consequences for the city's economy and infrastructure. With fewer residents, businesses could suffer, service industries could struggle, and the overall vibrancy of the city could diminish.
The Current Reality
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Many residents are struggling with high rental costs.
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Even in traditionally less expensive areas like Mount Druitt, the median house price is approaching $1 million.
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The dream of settling down, starting a family, and securing a future through home ownership is becoming increasingly difficult for many in Sydney.
The Vacancy Problem
Currently, around 10% of Sydney's housing stock is vacant. This is often due to investors who prioritize equity growth over renting out properties. The logic is: property values in Sydney are increasing so rapidly that its owners are already profiting from it without even renting. This exacerbates the affordability crisis and contributes to the growing sense that Sydney is becoming unlivable for many.
Unattainable Dreams?
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How can someone start a life in Sydney?
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How can they settle down and afford to live there?
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How can they plan for retirement in such an expensive environment?
Many are running the numbers and realizing that these goals are simply unattainable in Sydney.
Market Statistics and the Commuting Conundrum
Over the past five years, property prices in Sydney have increased by 57%. The median house price now sits at $1.6 million, while the median unit costs over $800,000. These prices are beyond the reach of the average Sydneysider. The consequence of this reality is the concept of long commutes. Consider a barista working in the CBD who cannot afford to live nearby. They may face a two-hour commute each way, working for $30-$35 an hour. How long can someone sustain this lifestyle?
A Ghost City?
If the exodus from Sydney continues, what will happen to the value of properties owned by wealthy individuals? If there are no service workers, no retail staff, and no one to maintain the city, will those properties still be worth millions of dollars? The author argues that a mass departure could turn Sydney into a "ghost city," where empty, vacant houses stand as monuments to unaffordability.
A Call for Change
Sydney faces a potential crisis unless it can find ways to create more affordable housing. The next generation needs a chance to buy homes and settle down in the city. The existence of over 160,000 abandoned houses raises questions about the current housing market and its sustainability. How can a dilapidated shack be worth $1.5 million simply because it's near a CBD that could become a ghost town?
Final Thoughts
The author questions the speculation driving up property prices and considers it "ridiculous" and "disgusting." They conclude by asking whether anyone would consider buying a house in Sydney for $1.6 million, or a one-bedroom unit for $800,000, given the current salary. The author deems Sydney a beautiful city to visit but ultimately too expensive to live in.