World’s priciest housing market revealed
The average property in Hong Kong costs 19 times the average annual income in that city, making it the most severely unaffordable property market surveyed in the latest International Housing Affordability Study.
The study, carried out by Demographia, puts Sydney in the second spot, with a median house price of more than 12 times the median income.
Vancouver, Auckland, Melbourne and San Jose are close behind, with house price-to-income median multiples of around 10. London and San Francisco were also among the least affordable markets.
Demographia classes as “affordable” a median multiple of between two and three. Anything over 5.1, meanwhile, is considered “severely unaffordable”. All the cities listed above fall into this category.
The survey covered metropolitan property markets in nine countries – Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States. As a whole, median multiples across Australia, New Zealand and the United Kingdom were “severely unaffordable”.
The only country that, as a whole, fell into the affordable category was Ireland. However, when only “major metropolitan centres” were considered – i.e., those with more than 1 million inhabitants – the US was the least unaffordable market, with a median multiple of 3.7. The top 13 most affordable cities were all in the US.
Demographia said the metioric rise in income to property multiples was “concerning”, adding that it was putting wider economic growth at risk.
“Housing costs, which represent the largest household expenditure category, have been rising much faster than incomes. The resulting stagnation or even decline in household discretionary incomes is at least as much a threat to prosperity and job creation as the limited gross income gains.”
The report went on: “Corrective measures that could halt or reverse losses in housing affordability from urban containment policy have either been absent or not been implemented. As a result, urban containment policy has been a profound policy failure, as house prices have doubled and tripled relative to incomes in many metropolitan areas.”
Demographia placed much of the blame for this astonishing rise in property prices on restrictive land use regulations.
“Without exception, throughout the history of the Demographia International Housing Affordability Survey, severely unaffordable markets have had strong land use restrictions (usually urban containment regulation). Such regulation has been associated with substantial losses in middle-income housing affordability,” the report said.