Sunshine Coast is now the most unaffordable market, according to the latest report by Demographia - replacing Mandurah in Western Australia which grabbed the title last year.

The Gold Coast came in third behind Honolulu, while Sydney was ranked fifth least-affordable market in the survey. Seven other Queensland metropolitan areas have joined the 'severely' unaffordable list - namely Brisbane, Bundaberg, Mackay, Rockingham, Cairns, Townsville and Toowoomba.

In total, there were 64 severely unaffordable markets across the countries surveyed, 24 of which were located in Australia and seven in New Zealand.

All 87 of the affordable markets are to be found in the US (77) and Canada (10), after house prices in those countries fell dramatically last year.

"Much of the reduction in prices has occurred in markets that have experienced the greatest loss in housing affordability in the past. The largest house-price decreases over the past year occurred in Ireland, New Zealand and the United Kingdom where housing affordability in nearly all markets had reached severely unaffordable level. In the US, the house-price declines have been far higher in those markets that had experienced the greatest housing-price increases, while markets that experienced much smaller price increases experienced far more modest losses," the report said.

Demographia noted that Australia had thus far been able to avoid material house-price declines; however, it says it's only a matter of time before it follows the others.
"It seems likely that sooner or later, the inherent instability and unsustainability that characterizes bubbles will lead to house-price declines in Australia. However, where it is possible for Australia to retain its highly over-valued house prices, there would still be a significant cost. Future generations would pay more for housing than in the past, and Australia's relative standard of living would decline."

Demographia methodology uses the median multiple which is the median house price divided by median household income to assess housing affordability. Housing markets with median multiples of more than 5.1 were rated as 'severely' unaffordable, 4.0 to 5 were 'seriously' unaffordable, while those that got 3 or less were deemed affordable. It compared the metropolitan markets of Australia, Canada, Ireland, New Zealand, the UK and the US.

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