HOUSING affordability is improving but Australia is still the second most expensive country to buy property, according to a global survey released on Monday.
However, Australian economist Andrew Wilson criticised the Demographia International Housing Affordability Survey, saying that comparing the Australian housing market to others was like making comparisons with Jupiter.
The ninth annual Demographia survey, which looked at 337 metropolitan markets in seven countries, shows that when it comes to buying property, on a national level, only China is more expensive due to the highly competitive Hong Kong market.
The report says that rising incomes and flat or declining house prices have led to a slight improvement in Australia's affordability. "However, each of the five major markets continues to be severely unaffordable, reflecting vastly overpriced housing," it says.
Under the survey's methodology, a rating of more than 5.1 is considered "severely unaffordable". Australia scores 5.6.
Not surprisingly, Sydney is the least affordable, with a median multiple of 8.3. Melbourne scores 7.5; Adelaide 6.5, Perth 5.9 and Brisbane 5.8.
Some regional Australian centres also rated highly, with Port Macquarie top of the regional list at 8.6, followed by Coffs Harbour at 8.0 and the Sunshine Coast, also at 8.0.
The survey finds that Sydney is the third most unaffordable major market after Hong Kong and Vancouver in Canada.
Results indicate that the 20 "most affordable" major city markets were in the US.
All of the major cities in Australia and New Zealand were rated "severely unaffordable".
But compared with other countries, even country areas were considered expensive. "More than three-quarters of the markets in Australia were severely unaffordable, while more than 60 per cent of New Zealand markets were severely unaffordable," the report says.
This compares with Canada, where less than 20 per cent of the markets are severely unaffordable. Ireland has no severely unaffordable pockets, with just 10 per cent of the US market is out of reach.
But Dr Wilson, senior economist at the Fairfax-owned Australian Property Monitors, questioned the validity of the survey by making world comparisons. "You may as well be comparing the Australian housing market to the one on Jupiter, because they are different animals," he said.
"If Sydney is so unaffordable, why do we have so much activity in the housing market?" he asked.
"Why are prices rising?"
Dr Wilson said the reason Sydney was expensive was the shortage of supply, as the Demographia survey identifies.