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Sydney has the second least affordable housing in the world: study

Its the global ranking Australians don't want.

Australia is a world leader in "severely unaffordable" housing, a study of global housing markets has found, with Sydney the second most unaffordable major housing market in the world, coming behind only Hong Kong.

Sydney and Melbourne are among the top 10 least affordable major housing markets, according to Demographia's 13th annual International Housing Affordability Survey.

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The survey found that of Australia's 54 housing markets, just four, including Karratha, Port Hedland and Kalgoorlie in Western Australia and Gladstone in Queensland, are considered affordable. However the survey says these markets are heavily reliant on the resources sector and without it could also be ranked unaffordable.

The survey blames Australia's "urban containment policies," for its housing unaffordability. Urban containment policies aim to curb the growth of the urban sprawl by encouraging greater density in existing housing areas rather than opening up new sites, commonly called "greenfields."

"All of Australia's major housing markets have severely unaffordable housing and all have urban containment policy," the survey said.

Melbourne is ranked the fifth least affordable housing market behind Hong Kong, Sydney, Vancouver, Auckland and San Jose.

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Adelaide ranked 16th and Brisbane 18th while Perth rounded out Australia's representation in the top twenty at 20th.

"House prices have gone through the (now unaffordable) roof," says Oliver Hartwich from the New Zealand Initiative.

"We should not accept extreme price levels in our housing markets. High house prices are not a sign of city's success but a sign of failure to deliver the housing that its citizens need."

"We need to tackle housing affordability urgently because the effects of unaffordable housing on society are becoming more visible by the day," he writes, in a foreword for the report.

"Especially at a time when there is a growing threat of populism to Western democracies, there is a social imperative for making housing more affordable."

Housing affordability has long been an issue at the forefront of Australia's political debate and one that has been repeatedly handballed between the federal and state governments.

High house prices are not a sign of city's success but a sign of failure to deliver the housing that its citizens need

Oliver Hartwich, The New Zealand Initiative

The federal government blame the states for restricting the supply of land for pushing up prices of existing stock.

Both the federal Treasurer Scott Morrison and the new premier of his home state NSW, Gladys Berejiklian, have this week cited housing affordability as a priority.

Mr Morrison is considering a government-backed financing model to help spur construction of new homes and is in London to examine how the British government's policy has fared. During the recent election campaign, the federal opposition proposed limited negative gearing, claiming the practice for existing properties is locking out prospective new homebuyers. The Coalition opposed Labor's policy claiming it would push up rents.

Ms Berejiklian has declared it "the biggest issue people have across the state". She says she will unveil policies about how to tackle the issues "in the near future."

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