The latest Demographia International Housing Affordability Report provides a comprehensive assessment of housing affordability across 94 major markets in eight countries: Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom, and the United States.
The 2024 report, released in co-operation with the Frontier Centre for Public Policy, is based on data from the third quarter of the year, reveals a growing disparity in housing affordability.
The Affordability Index
The affordability index assesses the ease with which people can purchase homes in different areas using the Median Multiple, a ratio of the average house price to the average household income.
A lower Median Multiple indicates higher affordability, reflecting fewer income years needed to buy a home.
The index categorises markets from "affordable" to "impossibly unaffordable," providing a clear comparison across cities.
Key Findings
Affordability Ratings: Utilising the Median Multiple, the report categorises markets from "affordable" to "impossibly unaffordable."
Geographic Comparisons: Affordability is evaluated across commuting areas, allowing comparisons both between different markets (e.g., Adelaide vs. Melbourne) and within the same market over time.
National Variations: There are significant differences in affordability within countries, highlighting that national averages often obscure local disparities.
Affordability by Nation
Australia: No affordable markets; five markets classified as severely or impossibly unaffordable.
Canada: Six markets are unaffordable, with Vancouver notably high at a median multiple of 12.3.
China (Hong Kong): Least affordable market with a median multiple of 16.7.
Ireland: One market is seriously unaffordable.
New Zealand: Auckland is significantly unaffordable.
Singapore: Moderately unaffordable with a median multiple of 3.8.
United Kingdom: Mixed affordability; none of the 23 markets are affordable.
United States: Diverse range; Pittsburgh (PA) is the most affordable with a median multiple of 3.1.
Top and Bottom Markets
Most Affordable: Pittsburgh (PA), Rochester (NY), St. Louis (MO-IL), and Cleveland (OH) lead with median multiples between 3.1 and 3.5. Other affordable markets include Edmonton, Buffalo (NY), and Detroit (MI).
Least Affordable: Hong Kong, Sydney, Vancouver, San Jose (CA), and Los Angeles (CA) are among the least affordable, with median multiples exceeding 10.
The report identifies a significant housing affordability crisis affecting the middle class, driven by rising housing costs that outpace income growth.
This is largely due to land use policies that limit housing supply, resulting in higher land prices and reduced affordability.
Urban Containment Policies
Policies aimed at curbing urban sprawl and increasing density, such as greenbelts and urban growth boundaries, have inadvertently limited land availability, causing steep increases in housing prices within these boundaries.
The report stresses the importance of prioritising individual well-being over rigid planning doctrines.
By focusing on economic opportunities and the needs of middle- and lower-income households, a more balanced approach to urban planning can be achieved, benefiting a broader spectrum of society.
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