AUSTRALIA still has the most unaffordable housing markets in the world despite two years of stagnant or falling house prices, according to the latest Demographia International Housing Affordability Survey.

Ahead of New Zealand, United Kingdom, Ireland and Canada, Australia has the largest number of housing markets that are classified as ''severely or seriously unaffordable'', the ninth annual survey of its kind reveals.

The survey shows Sydney is the third most expensive major housing market in the world, with a median multiple of 8.3, following Vancouver in Canada with a multiple of 9.5, and, most expensive, Hong Kong where the multiple is 13.5.

Detroit, USA. $US479,900 ($A456,437).

Melbourne is ranked as the seventh most unaffordable major housing market in the world, with a multiple of 7.5. It trails behind London, San Francisco and San Jose in California.

The Demographia survey ranks the affordability of housing in the US, Canada, UK, Australia, NZ, Ireland and Hong Kong by dividing the median house price with the median household gross annual income before tax. A multiple of three or less is seen as affordable.

The measure for evaluating urban markets is recommended by the World Bank, the United Nations and is used by the Harvard University Joint Centre on Housing.

Historically, the median multiple has been similar in Australia, Canada, Ireland, NZ, UK and US, the survey said.

But restrictive land supply policies have seen the median balloon in the last decade resulting in more severely unaffordable markets, particularly in Australia and NZ, it said.

The most affordable major housing market was Detroit in the US, which had a median multiple of 1.5 reflecting the depressed state of its economy.

The affordability of Australia's major housing markets has improved from a median multiple of 6.7 to 6.5 over the past year, as Australia also moved down the ranking with 8 out of the 20 most expensive housing markets. Only four of those were in the top 10 most expensive as opposed to five in last year's survey. ''However, each of the five major markets continues to be severely unaffordable, reflecting vastly overpriced housing,'' the survey noted.

The last time Australia's housing markets were classified as affordable was in the 1980s.

The country's least expensive housing markets were in Shepparton and Mildura in Victoria.

Jess Cooke, 30, fears she and her partner David, also 30, may never afford to buy a house.

After travelling in their 20s, they are renting a unit in Chadstone for $1700 per month. ''After bills, I have about $200 per month for spending, he has about $400-500,'' she said.

''What I would love is for someone to tell me how the hell we are supposed to even start saving for a house? I have no savings, just $10,000 in credit card debt.

''If it takes three years to pay the debt, then another three to save for the house, that's six years, I'll be 36 - what about kids?

''So we will probably rent forever. Seems easier. Perhaps we'll buy a house once the kids are grown up and I've worked on a reasonable income for 20 years - right now it's $50,000 and his is just over. Yeah, the great Australian dream.''

Ms Cooke is about to finish a bachelor of business and is working in administration in a financial planning practice. Her partner is a chef.

Great Australian dream remains 'unaffordable' despite price falls