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Vancouver and Toronto in top 5 most unaffordable for homes globally

·2 min read
Aerial view of downtown Vancouver city skyline, in Vancouver, British Columbia, Canada.
Vancouver average home price is over $1 million.

Rapidly rising home prices and stagnant wages mean Toronto and Vancouver have the dubious distinction of being among the top 5 least affordable housing markets in the world.

A new report from think tanks Urban Reform Institute and Frontier Centre for Public Policy used something called the median multiple — a measurement of income in relation to housing prices. The higher the number, the less affordable the market. It found Hong Kong was the least affordable for the 11th year with a score of 20.7.

Vancouver was second with a score of 13, which is worse than last year’s 11.9. Although minor, Hong Kong actually improved from 20.8.

Sydney (11.8) and Auckland (10.0) are third and fourth followed by Toronto at 9.9.

Montreal and Ottawa-Gatineau didn’t make the top 20 but each has deteriorated to being considered ”severely unaffordable".

The report’s authors say affordability has been deteriorating for decades, but the pandemic has exacerbated the situation.

“In this year of the global pandemic and lockdowns, it is not surprising that housing affordability given the large influx of new buyers, particularly in suburban and outlying areas — has continued to deteriorate,” read the report.

“As a result many low-income and middle-income households who already have suffered the worst consequences from housing inflation will see their standards of living further decline.”

Even though prices have shot up in many of the country’s markets, Bank of Canada Governor Tiff Macklem says he’ll get worried when he starts to see extrapolative expectations.

"When we see people starting to buy houses solely because they think that prices are going up, that is a warning sign to us,” he said at a virtual event hosted by the Edmonton Chamber of Commerce and the Calgary Chamber of Commerce Tuesday.

“We are starting to see early signs of excess exuberance but we’re a long way from where we were in 2016/2017 when things were really hot."

Only four markets are rated affordable (score of 3 or less) and all of them are in the U.S. — Pittsburgh, Rochester, Buffalo, and St. Louis.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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