Young teachers priced out of Sydney housing market

Key workers such as teachers can no longer afford to buy houses in Sydney, a report commissioned by Teachers Mutual Bank, Firefighters Mutual Bank, Police Bank and My Credit Union has found.

The Key Worker Housing Affordability in Sydney, researched by the University of Sydney Urban Housing Lab, provides analysis of declining levels of housing affordability across greater and metropolitan Sydney for key workers including teachers, firefighters, nurses, police, ambulance drivers and paramedics.

The report found “if current patterns continue essential workers will remain stuck in the private rental system, unable to compete with investors and upgraders to purchase their own home”.

“The emphasis is on younger key workers who are yet to make their first home purchase and who face new affordability barriers which were not encountered by previous key worker cohorts for whom home ownership has largely been achieved,” the report said.

The report also highlights the economic and social implications of declining housing affordability for key workers in metropolitan Sydney, including the implications of the ensuing choices key workers must make. These choices include relocating to more affordable areas, facing long commutes to work, or “opting out” of home ownership in order to rent closer to employment.

Failure of regions to attract and retain key workers can generate large social and financial costs for society, the report said.

“In Sydney there is a growing spatial mismatch between where key workers live and work. Although key worker jobs are situated throughout the metropolitan region, and particularly in inner Sydney, the majority of the metropolitan region’s key workers reside in outer ring suburbs. 


“Since 2006, some inner and middle ring subregions of metropolitan Sydney have experienced a net loss of key workers meaning that more key workers left the subregion than moved in, while outlying areas including the Illawarra, Newcastle and the Hunter Valley have experienced net gains. 


There are some locations across the Sydney metropolitan region where house prices or rents are only just out of reach for key workers, so modest interventions to improve access to home ownership could increase the extent of locations that are potentially affordable.

“Single key workers face particular barriers to home purchase. Based on median house prices in 2016, a single teacher (mid level graduate), with a slightly higher income, would only be able to purchase a median priced home in a few locations, including Wyong, Cessnock, Lake Macquarie, Maitland, Port Stephens and Shellharbour, all of which are 50km to 100km or more from the Sydney CBD.”

The report said housing affordability for key worker groups is likely to decline further without effective market innovation or policy change. Compared to contract workers and those in less stable employment, key workers have steady and predictable incomes, enabling them to service a mortgage. However, without some intervention to improve purchase affordability, home purchase rates amongst key workers will fall.

“There are some locations across the Sydney metropolitan region where house prices or rents are only just out of reach for key workers, so modest interventions to improve access to home ownership could increase the extent of locations that are potentially affordable.”

For higher income key workers and dual income key worker households, the report said that there are a number of inner and middle ring suburbs that are only unaffordable by up to $50,000. Market strategies (eg innovative design or products) and or policy interventions (to help secure affordable housing opportunities within new development) might be particularly effective in these contexts.