Where To Now For Greater Sydney?

House prices in Sydney have rippled outward making even long commute suburbs out of reach for most first-home-buyers. If you are not from a wealthy family and looking to buy a your first home (not a unit) then you already know that Sydney is not a good option.

Demographers will be using Sydney as a case study in the years to come, analysing the social and economic impact of losing young families. The age-sex pyramid you see on The City Of Sydney Community Profile or the critiques at a country level by Peter Zeihan offer fascinating insights. Looking ahead 10 years from now or longer, I wonder if Sydney will start to experience some of the labour-force problems encountered by places like Silicon Valley. An article published by Vox back in 2019 titled "Even tech workers can’t afford to buy homes in San Francisco" highlighted the impact on six figure salary technology sector workers. Literally dozens of articles can be found with a quick Google search covering the even bigger impact on essential workers. It makes me start questioning how does Sydney staff the local Macca's in 20 years from now?

Moving a bit further out used to be the answer. My analysis has looked at house medians, aggregated using the Australian Bureau of Statistics (ABS) standard called a Statistical Area 3 (Sa3). A centroid of each Sa3 (lat/long) was produced to then measure its distance to the city centre. The objective here is to compare the median house price between cities for average distances. Each Sa3 was then classified into 5 different groups based on distance;

• Inner City (within 10km)
• Middle City (10 to 20km)
• Outer City (20 to 50km)
• Commutable (50 to 100km)
• Long Commute (100 to 200km)

City median house price comparison - 12m to April 2022

Even though we can find many suburbs and Sa3s offering houses at under $750,000, the table does highlight significant differences between each city. On average, a $750k budget home buyer is locked out of a 200km radius around Sydney. Buyers would have better luck in Melbourne - but would be pushed 50km out. But our $750k buyer could still find plenty of nice houses in 'middle city' options today within 20km of Adelaide, Perth or Brisbane.

Below is a radar (star) chart comparing each city. The maximum radius that worked best for displaying all of the 6 cities in a single view was completely inadequate for Sydney (sorry). But it does illustrate a point of how out-of-whack Sydney really is. It is not inconceivable to imagine the long commute median to hit $1M in the coming years.

I'm not sure if even fast-train to Newcastle will solve the dilemma of finding low cost teenage workers in 20 years. Maybe the only option is a Tesla Optima Robot to flip the burgers in Sydney?

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Thanks for reading.

Kent Lardner