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On top of the world: housing affordability

Thursday, January 28, 2010

Catherine Deshayes

A spotlight has been shone on global housing affordability by the release of the 6th Annual Demographia International Housing Affordability Survey - so just where are the improvements in affordability and which countries are becoming less and less affordable?...

The Demographia study examines the relationship between household incomes and house prices, in determining a city's affordability.

The survey covered 272 metropolitan markets in six nations - the United States, the United Kingdom, Canada, Australia, Ireland and New Zealand.

Overall, the results revealed some improvement in housing affordability, especially in the United States and Ireland but a continuing loss of housing affordability, especially in Australia.

The survey estimates housing affordability using the "Median Multiple," which is the median house price divided by the median household income. Vancouver in Canada was ranked as the most unaffordable place to live, followed by a medly of Australian places - Sydney, Darwin, and the Gold and Sunshine Coasts.

Affordable markets were found in both the United States and Canada. This included fast-growing markets, such as Atlanta, Dallas-Fort Worth and Houston. It also included Detroit, which has experienced massive foreclosure rates as a result of the credit crunch.

There were 18 severely unaffordable markets in five nations. The least unaffordable market was Vancouver, Canada. Sydney, Australia was the second least affordable, followed by Melbourne and Adelaide.

The most unaffordable markets also included London, San Francisco and Auckland, New Zealand. Other New Zealand cities including Tauranga, Christchurch, Wellington and Dunedin also came within the top 50 on the severely unaffordable scale.

The survey did not include Hong Kong, however, where housing is notoriously expensive.

The most expensive place in the United States to live was Honolulu, Hawaii (6th overall) and in Great Britain it was Bournemouth (7th).

Australia was by far the least affordable of the countries surveyed, followed by New Zealand, Britain, Canada, Ireland and the United States. A household in Sydney may have to spend as much as 50 per cent of its income on housing.

American cities dominated the first few hundred places on the affordable housing index. There, housing could cost around 20 per cent of household income.

Check out homes for sale all across New Zealand at http://new-zealand.themovechannel.com/

Picture of Auckland by morguefile