World's 5 Least Affordable Property Markets
India’s teeming millions pose a challenge as it pursues to provide housing to all of its population by 2020. Developed economies are seen sitting in the same boat amid more turbulent waters, in fact, data show.
In its 15th edition, the Demographia International Housing Affordability Survey that analyses data for the third quarter of 2018 shows that property prices across the world are growing much faster in comparison with individual incomes. The 2019 survey that has ranked 29 major housing markets as “severely unaffordable” says rising housing unaffordability requires immediate attention.
Let us have a look at five least affordable property markets in the world as shown in the Demographia International Housing Affordability Survey of 2019 that covers 309 metropolitan housing markets across eight countries, including Australia, Canada, China (Hong Kong), Ireland, New Zealand, Singapore, the UK and the US.
Medium multiple: 20.9
Country medium multiple: 20.9
Various measures thrown in by authorities to control property prices seem to have done the trick with rates coming down between 15 and 25 per cent here. That factor notwithstanding, Hong Kong has been ranked the least affordable housing market in the world by the survey for the ninth time in a row. Median multiple, which stood at 19.4 in the last year’s survey, also increased this year to 20.9.
Notably, this is the highest median multiple ever recorded by the survey.
For the uninitiated, median multiple is the ratio of the median house price by the median gross annual household income. Markets sowing median multiple of 5.1 fall in the “severely unaffordable” category while markets with a median multiple of 3 and under are categorised as affordable.
The unaffordability of this property market is evident from the fact that there is a wide gap between the median multiple of the first and second least affordable housing markets in the world. That brings us to Vancouver.
Hong Kong was also listed as the top city in the UBS Global Real Estate Bubble Index in 2018.
Medium multiple: 12.6
Country medium multiple: 4.0
Housing affordability in Canada’s coastal city Vancouver, which an estimated 603,502 population according to Census 2011, has further worsened when compared to last year, with the city displacing Sydney at the second position. Vancouver, says the survey, has experienced significant housing affordability deterioration among major markets, with its median multiple deteriorating from 5.3 to 12.6, equivalent to 7.3 years of pretax median household income. Also, Vancouver’s median multiple is the third worst seen in the survey history.
The city housing market, says the survey, has high evidence of overvaluation where housing prices remain higher than supported by economic and demographic fundamentals.
The 2018 UBS Global Real Estate Bubble Index rates Vancouver as having the fourth worst housing bubble risk in the world.
Medium multiple: 11.7
Country medium multiple: 5.7
Researches show housing prices in Sydney, the costliest residential market in Australia, are falling at the highest rate in the past 35 years. That did have a little bearing on house affordability in Sydney, one of the largest cities in the country. From being the second least affordable property market in the world, Sydney has slipped one place in this year’s survey.
There is a great deal of scope for improvement nevertheless ─ Sydney’s median multiple was 7.6 in 2004, and has risen 60 per cent since then. The city also figures in the UBS Global Real Estate Bubble Index.
City medium multiple: 9.7
Country medium multiple: 5.7
In Melbourne, one needs three years’ more income now to afford a house than they did in 2004, says the survey. Despite falling property prices that are likely to see an upwards movement starting next year according to a KPMG report, Melbourne has remained in the list of five least affordable property markets in the survey.
San Jose (the US)
Medium multiple: 9.4
Country medium multiple: 3.5
While the survey has ranked the United States as the nation that is home to some of the world’s most affordable housing markets, San Jose’s struggle with housing affordability continues. The third most populous city in California, San Jose recorded a median multiple of 9.4 in the current survey. Los Angeles is the second least affordable housing market in the US, followed by San Francisco and Honolulu.