Sydney has been acclaimed as one of the world's most liveable cities, but news this week that the median house price has hit $1 million has everyone gasping. Surely the Harbour City must now be one of the world's least affordable for property.

In the last year, Sydney climbed six spots, from 11th place to fifth, in the annual Quality of Life survey by global affairs magazine Monocle, on factors including the cost of three-bedroom housing, unemployment levels and proximity to beaches.

But with the median price of a three-bedroom house now standing at $929,000 over Sydney's inner and middle rings – just below the city's overall median house price of $1,000,616 according to the Domain Group – there are fears that much of the city is now out of reach for average home buyers. 

So how do we fare in the affordability stakes against major cities above us on the survey, such as the top-ranked liveable city Tokyo and then London, New York, Paris and Hong Kong?

Pretty well, all in all, says Savills national head of research Tony Crabb. "A lot of the bleating that's going on about affordability is actually about other issues," he says.

"It's about, 'I don't want to live there', or 'It's too small', or 'too old', or 'too new', or 'it smells', or 'I don't like that street'. It's not about what's appropriate and affordable." 

Sure, the median house price is high, but when you look at the average-square-metre comparison, Sydney looks good.

"You have to compare the cities in terms of price per square metre, and homes in Hong Kong are three to four times the price of Sydney, in London double the price, and while New York and Singapore are about the same price per square metre, their apartments are much bigger, so actual homes are more expensive in both places, too."

In Tokyo, prices of apartments – there are few houses – are similar to three-bedroom houses in Sydney, but they are tiny, and a 1½-hour  commute to work is not uncommon, says Crabb of figures in Savills' annual World Cities Report, which shows that only Paris is cheaper than Sydney – by about 20 per cent.

At independent global property consultancy Knight Frank, who produce annual research in The Wealth Report, the story's similar. They do their international comparisons on the basis of what $US1 million could buy in luxury residential real estate in top areas of every city.

While you could buy less space in Sydney in 2015 than 2013 – 41 square metres today in our top suburbs, compared with 44 square metres two years ago – we are still certainly more affordable than other well-known cities, says Knight Frank's director of residential research for Australia, Michelle Ciesielski​.

"If you think that in Hong Kong you're only able to purchase 20 square metres and in London 21 square metres, compared to our 41 square metres, then we really are affordable," Ciesielski says. "At the top end of the market, which we look at, we're still more affordable than New York, Singapore or Hong Kong – just not as affordable as Paris."

Even when comparing what $1 million Australian buys in each of these cities (see table), Sydney doesn't come out badly.

Price growth around the world is happening at vastly different rates, too. Knight Frank's latest research report, the Global House Price Index, found that house price growth in Europe varies from double-digit growth in Ireland to little growth in France and, not surprisingly, Greece.

The US recorded 4.1 per cent growth in the year to March, while in Hong Kong prices are up 19 per cent year on year due to tight supply pushing up prices. This compares with 16.6 per cent growth in Sydney to March 2015 – or a staggering 22.9 per cent for the year to the end of June.

"But we're still better value than London and New York; Singapore has always been expensive, and Hong Kong real estate is just ridiculous," says Richard Cooper from agents Our Estates, who has lived in London, New York and Los Angeles, and worked in real estate in Singapore and Hong Kong.

"It is difficult, though, to compare lifestyles in each city as they're so totally different. But Sydney is always hard to beat."

Prices 'incredible'

With their three-bedroom house in Berowra Heights now for sale at just over $950,000, Jake and Dominique Diaz are amazed to think it may still represent better value than similar homes in New York, London, Hong Kong, Singapore and Tokyo.

When they bought the house on a 935-square-metre block, it was a hugely neglected cottage, with an overgrown jungle of a back garden. But Jake ploughed the next two years of his life into fixing up every aspect: resheeting the walls, putting in a new kitchen, sorting out the bathroom, adding a deck to the back and levelling out the garden. 

"It's incredible to see how expensive property in Sydney has got," says Jake, 31, a product designer. "I would never have believed our house could ever be worth that much.

"Yet while it's a good time to sell, you still have to buy again at those prices too!" 

The house at 39 Lonsdale Avenue now has two living areas and a family room leading to the deck and back lawns, and has been the perfect family home for Jake, bookkeeper Dominique, 29, and their 18-month-old son Vincent.

But now expecting a new baby in September, they've decided to sell, through McGrath Hornsby agent Jessica West (0439 077 378), in search of a new house to renovate.

"We will be very sad to go," says Jake. "It's now a beautiful house surrounded by bush, with a bush walk from the end of our cul-de-sac. It's been a great home for us."

What $1 million gets you around the world. . .

75006 Saint Germain des Pres
Paris
About $900,000

Ooh la la … Voulez-vous coucherin a home in Paris?

With Paris the only one of our chosen cities with lower property prices per square metre than Sydney, the City of Light offers opportunities that are simply magnifique.

For about the median price of a three-bedroom house in Sydney, you could buy a beautiful pied-a-terre in a fabulous area of Paris – albeit one that's appreciably smaller. But while this fourth-floor, one-bedroom apartment is tiny at just 37 square metres, it will place you centre stage in an area of the city with an exceedingly rich history.

Nestled among a swath of famous French cafes, such as Les Deux Magots and Cafe de Flore​, this spot in a much sought-after street in the 6th arrondissement, on the left bank of the Seine, is in an area frequented by the cremeof French intellectuals, philosophers, actors and musicians.

From this apartment, walk the same streets that have been home to luminaries such as Jean-Paul Sartre, Simone de Beauvoir, Jean-Luc Godard​ and Francois Truffaut​.

Paris offers great promise for Sydney bargain-hunters, with property prices soft from a stagnating housing market, a weak economy and the lacklustre euro. At the same time, the lifestyle is the stuff of Australian dreams with no fewer than 97 Michelin-starred restaurants.

This flat overlooks an attractive landscaped garden, and has a good kitchen and bathroom. It'll also keep you fit. You'll have to walk up the stairs as, like many Parisian apartments, there isn't a lift.

Contact Jelena Cvjetkovic, Savills jcvjetkovic@savills.com, Phone +44 20 7016 3740

7 Perrin's Court, Camden Road, London NW1
About $953,000

For about the price of a Sydney three-bedder, you could splash out in London on a one-bedroom luxury apartment (43.6 square metres), in a boutique block of five recently converted from a period house in Hampstead. With lots of character and excellent finishes, this home is 800 metres from the train station and 1.2 kilometres from the nearest tube station. Contact James Diaper. Savills jdiaper@savills.com Phone +44 (0) 20 7472 5000

245 East 72nd Street, Upper East Side, New York
$990,000

Live like a quintessential New Yorker in this high-up one-bedroom apartment (50.49 square metres) in a graceful block with its own doorman. "Have a nice day now, won't you?" he'll say each day as you head off into the world's most exciting city through the nearby gardens. With a newly-renovated kitchen and bathroom, there's also a communal gym and laundry. Contact Victoria Ghilaga vghilaga@stribling.com Phone +212 452 4392

41a Woonona Ave North, Wahroonga Sydney 
$890,000+

Back at home, how about this pretty three-bedroom weatherboard house in a friendly Sydney street, three minutes drive to Wahroonga railway station and village? In lovely established gardens on a 490-square-metre block, it has a big family living area, timber floors, high ceilings and an alfresco dining deck with pergola. For auction August 8 via Jennifer Aaron of Jennifer Aaron Real Estate(Phone 0418 440 653).

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