Hong Kong, Sydney and Vancouver, Canada, have the world’s most unaffordable housing, according to a global survey that compares home prices with income.
The median home in Hong Kong cost 19.4 times the median income, according to housing advocacy organization Demographia’s annual International Housing Affordability Survey, released this week. In Sydney, that multiple was 12.9; Vancouver was 12.6.
The study covered housing prices from the third quarter of 2017 for 293 metropolitan housing markets in Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States. Comparing median home prices to the median income in each area shows that the world’s most unaffordable housing continues to be in Hong Kong and in Australia.
Next on the unaffordable list were San Jose, California, with housing costing 10.3 times the median income, and Melbourne, Australia, at 9.9. They were followed by Los Angeles (9.4), Honolulu (9.2), San Francisco (9.1) and Auckland, New Zealand (8.8).
Demographia ranks any score above 5.1 as “severely unaffordable.”
“There are no affordable markets in Australia, China (Hong Kong), Japan, New Zealand, Singapore or the United Kingdom,” Demographia reported.
The report states 20 of Australia’s 22 markets, all of New Zealand’s eight markets, and 28 of the United Kingdom’s 33 markets ranked as either seriously or severely unaffordable.
Hong Kong, Sydney and Vancouver retained their rankings from the the previous year’s survey, but their median multiples increased in 2018. The 2017 survey showed Hong Kong with a median multiple of 18.1, Sydney 12.2 and Vancouver 11.8.
Demographia said Hong Kong recorded its eighth straight year as most unaffordable market, while Sydney hit the highest median multiple outside of Hong Kong.
Demographia’s ranking of most-affordable markets is good news for North Americans, with 12 of the top 13 in the U.S. and Canada. Youngstown, Ohio, recorded the lowest median multiple of 1.9, followed by Moncton, New Brunswick, and Utica, New York, at 2.1.
In major housing markets, the U.S. had the top 10 most-affordable, with Rochester, New York, at the top (median multiple of 2.5), followed closely by Cincinnati, Ohio; Cleveland; Buffalo, New York; Oklahoma City; Pittsburgh; Detroit and St Louis.
“Among the 293 markets, Ireland and the United States have the most affordable housing,” Demographia said. “Among the 76 severely unaffordable markets, 30 are in the United States, 16 in Australia, 15 in Canada, 10 in the United Kingdom, seven in Canada, six in New Zealand and one in China.”
Demographia said “there are some signs of progress” by world governments in addressing housing affordability, such as increasing supply of housing stock. But the group said more had to be done to ensure housing remained affordable for all people.
“The key to both housing affordability and an affordable standard of living is a competitive market that produces housing (including the cost of associated land) at production costs, including competitive profit margins,” the report said.
High housing costs, Demographia said, drain other areas of the economy.
“The extraordinarily high house prices have significantly reduced discretionary income in the costly markets that could otherwise be used for other goods and services. Not only would this additional consumption (or savings) increase the standard of living, but it would also lead to higher levels of employment and economic growth,” the report said.
“Further, the higher housing prices feed the demand for more low-income affordable housing, which requires public subsidies. The higher prices make the housing market unaffordable for more households.”
Read the full report on Demographia’s website.