Sydney quickly becoming the city few can afford to live in

By Greg Ansley

Sydney's harbourside jewel, the Opera House, is in dire financial straits. Photo / Mark Mitchell
Sydney's harbourside jewel, the Opera House, is in dire financial straits. Photo / Mark Mitchell

CANBERRA - The glitter is beginning to tarnish on Australia's golden city.

Sydney has been hit by a run of bad news that peaked yesterday with a poll finding that almost half its population believed a comfortable life there required an income of at least A$100,000 ($118,441) a year.

That excludes more than 80 per cent of Sydneysiders.

And the cost of living there keeps getting higher.

A BIS Shrapnel report for the Urban Taskforce warned in April that unless action was taken soon, cost pressures would slow population growth and see Melbourne overtaking Sydney as Australia's biggest city within three decades.

Sydney has also been hit by increasing concerns over its groaning infrastructure, most recently reports that its harbourside jewel, the Opera House, is in such dire financial straits it faces permanent closure.

New South Wales Premier Kristina Keneally was forced to deny the reports amid speculation that next week's state budget would pump tens of millions of dollars into the building to mend its most pressing problems.

Fixing the city's other urgent issues will be more difficult.

A poll by the Sydney Business Chamber found that three-quarters of residents believed that the city had become less affordable in the pastyear, especially the cost of housing.

The poll said that three years ago a quarter believed they needed at least A$100,000 to live comfortably.

That figure had since risen to 47 per cent, but only 15 per cent of Sydneysiders earned six-figure incomes, the Daily Telegraph reported.

A PricewaterhouseCoopers report for the chamber further found that while Sydney fared well against major cities in other countries, its potential was being held back by ailing transport infrastructure and lack of human capital and innovation.

The report listed Sydney's strengths as its environment, culture and business and political environment.

Its weaknesses included the cost of housing, its infrastructure, accessibility, transport system and commuting times.

"Sydneysiders know we need to find a new approach to transport," chamber executive director Patricia Forsythe said. "That has emerged as the hot issue going forward."

Inflation has also hit Sydney, with the rising cost of living further battered by interest-rate rises that are pushing house prices beyond the reach of many. Figures from Australian Property Monitors showed that the median house price last year rose more than 12 per cent to nudge A$600,000.

Since then, the Bureau of Statistics has reported a further 5.3 per cent rise in Sydney house prices in the first three months of this year, pushing the total increase in the 12 months to the end of March to 21 per cent. This does not include two increases in official interest rates since April.

The latest Demographia international housing price survey makes even grimmer reading.

Sydney was the second-least-affordable city - behind Vancouver in Canada - among the 272 markets surveyed in Australia, Canada, Ireland, New Zealand, Britain and the United States. It was less affordable than such major cities as London, New York and San Francisco.

The report said residential land release in Sydney had fallen from a historic average of 10,000 lots a year to fewer than 2000 in 2007, driving up the land component of house prices from 30 per cent to 70 per cent.

"The result has been a cost increase of some three times what it was a mere 10 years ago," Demographia said.

- NZ Herald

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