HOUSE prices in Australia remain among the most unaffordable in the developed world.

The annual Demographia survey describes house prices in Australia - based on price to income - as "vastly overpriced", with southeast Queensland scoring poorly.

Of the 39 housing markets studied in Australia, all were rated as either "seriously" or "severely" unaffordable, based on median house price to annual household income ratios of more than four times.

The average ratio for all Australian markets is 5.6 times, which rises to 6.5 times in the large capital cities.

The report said a lack of competitively priced land was helping drive up prices.

Demographia ranks anything below an average house price to average pre-tax income ratio of three times as "affordable".

Australia has nothing in this category, while the US, which has been through a housing collapse, has 100 out of 216 districts classed as affordable.

Moderately unaffordable runs up to a multiple of four, where again Australia has nothing.

"Overwhelming economic evidence indicates that urban containment policies, especially urban growth boundaries, raise the price of housing relative to income. This inevitably leads to a reduced standard of living and increases poverty rates, because the unnecessarily higher costs of housing leave households with less discretionary income to spend on other goods and services," the report said.

"The higher costs ripple into rental markets, tightening the budgets of lower income households who already suffer from lower discretionary incomes."

The analysis does not take into account other factors such as tax, population shifts and interest rates.

Just shy of 75 per cent of Australia's 39 housing markets as defined by Demographia are classed as "severely unaffordable".

The most unaffordable area was Port Macquarie in NSW, with a price-to-income ratio of 8.6, while the most affordable was Shepparton in Victoria with a multiple of 4.5 times.

In Queensland, the Sunshine and Gold Coast ranked the worst, with an affordability ratio of 8.0 and 7.6.

Brisbane came in at 5.8, close to the middle of the pack.

The report notes: "Each of Australia's major markets, with the exception of Sydney, had housing affordability within the (multiple of 3.0 affordability range) during the 1980s, before the widespread adoption of urban containment policies, which is referred to as 'urban consolidation' in Australia."

Overall, Hong Kong, Vancouver, Honolulu, Bournemouth in the UK and Port Macquarie were ranked as the world's five most unaffordable markets.