Even with cooling prices — Vancouver’s housing market is now the second most unaffordable in the world. Only Hong Kong is more expensive, according to the 15th annual Demographia International Housing Affordability Survey.
Sydney, Melbourne, San Jose, Los Angeles, Auckland, San Francisco, Honolulu, and London and Toronto (tie) rounded out the rest of the top 10. The other Canadian city on the list was Montreal in 49th place. The report uses a measure called the ‘median multiple’, which is the median house price divided by the median household income.
A ‘severely unaffordable’ median multiple is 5.1 or higher. In other words, a 5.1 rating means a home costs more than 5 times the average household income. In Vancouver’s case, it balloons to more than 12 times the average annual income.
The report looked at 91 major metropolitan markets with populations of a million people or more in Australia, Canada, China [Hong Kong Only], Ireland, New Zealand, Singapore, the United Kingdom, and the United States. There were three megacities with more than 10 million people.
“The solution to unaffordable housing does not consist in inventing clever regulatory gimmicks or in designing massive subsidies to be paid by the taxpayer or by a few wealthy households. The answer will always consist of increasing the supply of land and floor space and removing any land and floor regulatory straight jacket,” says Alain Bertaud, one of the authors, in the report.
“The tradeoff between housing standards, like housing sizes, densities, lot sizes, and location are always better left to the decision of the consumer, and not the whim of the regulator.”
There are only 9 affordable housing markets. All of them are in the United States.
Pittsburgh, Rochester, and Oklahoma city make up the top 3. Canada has none. Only Edmonton, Calgary, and Ottawa came close with a rating of ‘moderately affordable’. Montreal was rated ‘seriously unaffordable’, while Toronto and Vancouver were rated ‘severely unaffordable’.
The report’s authors say B.C.’s foreign buyers’ tax has mostly affected higher-priced homes while doing little to make mid-priced homes more affordable.
The report also took a broader look at all housing markets for a total of 309 metropolitan markets, and not just the bigger cities. Canada does much better here with four of the nine most affordable markets, including the first and second most affordable, Cape Breton and Fort McMurray. Canada is home to 12 cities that are rated ‘affordable’. That’s second only the U.S. with 56.