Despite price declines and expectations of depreciation, these markets are still too pricey for the average income earner, says Demographia
There are now 29 severely unaffordable major housing markets in the world, according to the most recent annual Demographia International Housing Affordability Survey released Monday.
The study, which tabulates median house prices against median household incomes in 309 cities, found that some of the world’s most unaffordable markets actually recorded price declines last year. However, none of the declines have been sufficient to “materially improve” housing affordability, Demographia stated.
The following cities have leapt to the top of the heap as the world’s most expensive for buying a home:
5. San Jose
The Californian city has a median multiple of 9.4, which means that a typical family would need to save and not spend a single penny for 9.4 years to buy a home at the median house price. Yet this figure is an improvement from last year due to strong income growth; along with San Francisco, San Jose has the highest median household income in the US.
Although nearly all of Australia’s major markets have experienced house price reductions or relative price stagnation over the past year, housing affordability remains severely unaffordable in the Victorian state capital. It would take 9.7 years of saving for a median-income-earning household to buy a Melbourne home.
The New South Wales capital has dropped from being the world’s second least affordable city, with a median multiple of 12.6, to third, with a median multiple of 11.7. It is Australia’s most severely unaffordable market, despite having experienced what has been called the largest Sydney price reduction in 35 years.
It would take 12.6 years of refraining from expenses to own a home in this Canadian city. It already has the dubious honour of having the fourth worst housing “bubble risk” in the world, as ranked by the 2018 UBS Global Real Estate Bubble Index. It is also the third worst housing affordability for a major market in the 15 years of the Demographia International Housing Affordability Survey.
1. Hong Kong
For the ninth year in a row, Hong Kong has been named the least affordable market in the world. From the previous record of 19.4 in last year’s survey, its median multiple has shot up to 20.9, the highest in Demographia history. The UBS Global Real Estate Bubble Index also rates Hong Kong as having the world’s worst housing bubble risk. However, price drops of up to 25 percent are in the offing for the Chinese SAR in 2019, Demographia noted.
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