Why Families Are Fleeing Sydney: A Deep Dive into the City's Housing Crisis
The Alarming Exodus of Sydney's Youth
In 2024, the NSW Productivity and Equality Commission raised a red flag, warning that Sydney's high housing costs are driving a "brain drain" among young families aged 30 to 40. This alarming trend has sparked a debate about the city's future and the well-being of its residents.
But here's where it gets controversial: while the commission's report highlights the issue, it proposes a solution that might not be the most appealing for families. The report suggests packing Sydneysiders into high-rise shoebox apartments, deregulating housing supply, and allowing for taller towers, smaller apartments, reduced storage and natural light, smaller balconies, and fewer car spaces. This approach, while potentially addressing the housing shortage, could make Sydney an increasingly unsuitable place to raise children.
The Numbers Don't Lie: Sydney's Housing Affordability Crisis
The numbers paint a stark picture. Sydney's median home price relative to median household income was an absurd 10.0 in the September quarter of 2025, well above the national average of 8.2. A median Sydney household was required to spend 54.5% of its income to service a new mortgage on the median-priced home in the September quarter of 2025, easily the highest in the nation, well above the national average of 45.0%.
The rental market is no better. The median advertised rent has soared by nearly 43% over the five years to the December quarter of 2025, adding $12,700 to the annual cost of renting for the median Sydney tenant. As a result, the percentage of income required to service rent on the median Sydney home was a record high of 33.7% in the September quarter, up from a low of 27.5% in the December quarter of 2020.
The Great Migration: Where Are They Going?
The majority of residents leaving NSW appear to have landed in Queensland. In the decade to 2025, Queensland received 260,467 residents from other states (almost the same number that left NSW), as well as 378,305 people from overseas. This trend is not just about Sydney; it's a broader issue affecting the entire state.
The Future of Sydney: A High-Rise Shoebox City?
The 2025 Population Statement from the Centre for Population projects that Sydney's population will expand by 2.85 million to 8.5 million by 2065-66, driven almost entirely by net overseas migration (NOM) of 2.77 million. However, Sydney is projected to lose around 1.55 million residents to other states, which will almost fully offset 1.50 million residents gained via natural increase (i.e., births minus deaths).
By comparison, Brisbane is forecast to grow by around 1.8 million over the next 41 years to 4.6 million. Brisbane's population increase is projected to come from a combination of NOM (877.4 million), net internal migration (365.1 million), and natural increase (462.0 million).
The Way Forward: A Balanced Approach?
So, what's the solution? The NSW Productivity and Equality Commission's approach of packing Sydneysiders into high-rise shoebox apartments might not be the answer. Instead, a balanced approach that addresses the housing shortage while preserving the quality of life for families could be more effective. This might involve a mix of policies, including reducing immigration to take the pressure off housing, investing in public transport, and providing incentives for developers to build more affordable housing.
The Bottom Line: A City in Transition
Sydney is at a crossroads. The city's housing crisis is driving families to seek more hospitable locations, and the future of Sydney's population growth is uncertain. As policymakers grapple with these issues, the well-being of Sydney's residents and the city's future must remain at the forefront of the discussion. The question remains: can Sydney find a balance between addressing the housing shortage and preserving the quality of life for its residents?
