Daily Management Review

Demographia: Housing in the US is the most affordable


For the ninth year in a row, life in Hong Kong remains the most expensive in the world, according to the anti-rating of the public organization Demographia. The average cost of residential real estate here is almost 21 times higher than the average annual salary of citizens. And the easiest way to buy housing is to buy it in the US, according to the report.

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The American public organization Demographia has been publishing quarterly reports on housing affordability around the world for 14 years. In total, Demographia specialists research the housing market of 309 cities in eight states: Australia, Great Britain, Hong Kong, Ireland, Canada, New Zealand, Singapore and the USA.

For the ninth consecutive year, real estate in Hong Kong has been considered the most inaccessible to citizens. The situation was not corrected even by the recent fall in real estate prices in the city - immediately by 10% in the third quarter of 2018. On the contrary, the ratio of housing prices to incomes of citizens has increased and reached 20.9, which is a record in the entire history of observations. Now the average salary in Hong Kong is about 200 thousand Hong Kong dollars (about $ 26 thousand). This means that the average cost of housing in the city is 4.15 million Hong Kong dollars (approximately $ 529 thousand). “Some real estate experts predict a fall in housing prices in the region of 15–25% in 2019. And, despite the fact that this is a significant decline, the housing market in Hong Kong will still remain extremely inaccessible, with a huge difference between prices and incomes of citizens,” the report says.

The housing situation in Hong Kong has not always been always like this: in the early 2000s, property values exceeded personal income by an average of four times, which would correspond to the category of “highly unaffordable housing” in the Demographia rating. But the policy of the authorities and the activity of Chinese and foreign investors have led to the fact that over the past decade, property prices in Hong Kong have tripled.

New Zealand (6.5) and Australia (5.7) are also considered countries with the most expensive and inaccessible real estate to citizens.

The country with the most affordable housing was the United States with an average availability of 3.5. “This became possible due to the growth of incomes of the population, which already exceeded the figures of the late 1990s, against the background of economic growth and record low unemployment among all ethnic groups,” the report says. Ireland is in second place among the countries (3.7), and Canada is the last with a housing indicator of 4.0.

Representatives of the USA are also heading the list of the most affordable housing markets among cities with a population of over one million - these are Pittsburgh and Rochester with a score of 2.6. And among all the studied markets, the Canadian town of Breton turned out to be the most accessible: here the average cost of housing is only 2.1 times higher than the average annual income of the population.

Within countries, the difference in the level of availability of real estate can be enormous. For example, Canadian Vancouver occupies the second line in the list of cities with the most inaccessible housing, after Hong Kong - real estate prices here are on average 12.6 times higher than citizens' incomes. Australian megacities Sydney (11.7) and Melbourne (9.7) rank third and fourth in Demographia’s anti-rating. Four representatives of the US state of California - Santa Cruz, San Jose, Los Angeles and San Francisco - also entered the top ten cities with the worst housing affordability indicators.

source: demographia.com