Bankstown, a suburb 20km from Sydney’s CBD, could be the centre of a trend toward unsustainable local market house pricing.
The area in Sydney’s south west has taken on the extreme characteristics of Hong Kong’s house price to income dynamics.
House prices have risen so fast that hardly anyone who lives their could now afford, on their current incomes, to get a loan to buy in their suburb.
“Bankstown is a typical example of the unsustainability of local market residential property pricing compared to local demographics,” says Citi in a research report.
The suburb’s median household income is $58,240 a year, 36% below the Sydney average and 22% below the national median of $74,776.
But the median house price in Bankstown is currently $1 million, just 15% below the Sydney average of $1.2 million and 56% above the national average of $640,000.
This chart shows local incomes compared to local house prices:
This places Bankstown’s house price to household income ratio at 17.2 times, which is more on par with Hong Kong (18.1 times) than Greater Sydney at 12.9 times average annual income.
This chart shows how Bankstown’s house price to income ratio is closer to Hong Kong than Sydney:
“The high level of rental properties in Bankstown leads us to believe that the division between house prices and household income can be attributed to multiproperty investors who reside outside the Bankstown local area,” says Citi.
This chart and map shows how different Bankstown is to the rest of Sydney in unemployment, ethnicity, rental propensity and religious affiliation: