Which Australian City Has the Most Unaffordable Real Estate? The Answer Might Surprise You.

We've all seen this chart. Next to New Zealand, Australia has one of the most overheated real estate markets in the entire world.

As of March 2018, Australian Home Prices have appreciated more than 83% above where they would be on an inflation-adjusted basis.

But which is the most overheated real estate market in Australia? It's definitely not Sydney. As it turns out, Sydney's price appreciation is below average. That honor goes to Melbourne, closely followed by Darwin, with Hobart and Perth fast catching up.

Amazingly, Darwin peaked way back in June 2014 - four years ago. It is now down more than 17% from that peak. The same holds true for Perth. Those markets have been in correction mode for years. At it's peak, Darwin home prices appreciated a full 156 percentage points above inflation. As of March 2018, the inflation gap for Darwin is down to only 99%. With an inflation gap of 117%, Melbourne is now the undisputed champion of unaffordable Australian real estate.

How about Sydney? Sydney's inflation gap is only 66%, substantially lower than the Eight City average of 77%.

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