Here Are The World's 10 Least Affordable Cities Of 2017

Tyler Durden's picture

In recent months, we've spent a lot of time writing about the various housing bubbles all over the world with an emphasis on Vancouver, Sydney and Melbourne (see here, here and here).  Now, courtesy of the "13th Annual Demographia International Housing Affordability Survey", we have a comprehensive comparison of just how bubbly some of the world's least affordable housing markets have become. 

The study, which analyzed 406 metropolitan housing markets around the world, compared affordability on the basis of a ratio of median homes prices to median gross incomes with anything over 5x considered "Severely Unaffordable."  And while there are obvious flaws in the methodology, including the fact that income isn't adjusted for local taxing policies and building quality, the study at least provides a basis for comparison.

Expensive Housing

 

Not surprisingly, Hong Kong and Sydney maintained their "lead" as the least affordable housing markets in 2016 with Vancouver moving into the number 3 spot with home prices there increasing by the equivalent of a full year's median income in just a single year.

Least Affordable Housing

 

Meanwhile, of the 94 "severely unaffordable markets" in the world, nearly 40% of them were located in the U.S. and another one-third were in Australia.

There are 26 severely unaffordable major housing markets in 2016. Again, Hong Kong is the least affordable, with a Median Multiple of 18.1, down from 19.0 last year. Sydney is again second, at 12.2 (the same Median Multiple as last year). Vancouver is third least affordable, at 11.8, where house prices rose the equivalent of a full year’s household income in only a year. Auckland is fourth least affordable, at 10.0 and San Jose has a Median Multiple of 9.6.

 

The least affordable 10 also includes Melbourne (9.5), Honolulu (9.4), Los Angeles (9.3), where house prices rose the equivalent of 14 months in household income in only 12 months. San Francisco has a Median Multiple of 9.2 and Bournemouth & Dorsett is 8.9.

 

There are 94 severely unaffordable markets, with 36 (of 262) in the United States, 33 (of 54) in Australia, 11 (of 33) in the United Kingdom, 7 (of 40) in Canada, 6 (of 8) in New Zealand and the one market in China. Singapore, Japan and Ireland have no severely unaffordable housing markets.

 

The least affordable among the smaller markets is Santa Cruz (CA) in the United States, with a Median Multiple of 11.6.

Expensive Housing

 

Of course, for anyone who still doubts the source of the 2006/2007 U.S. housing bubble, the relationship between median incomes and housing prices remained fairly constant in the U.S. right up until the Fed decided to utilize near-zero interest rates to manage stock prices shortly after the 2000 tech bubble burst... 

Expensive Housing

 

...a mistake that Yellen & Co. seems to be on a path to repeating.

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peddling-fiction's picture

Still, Switzerland (multiple cities), Oslo, New York, and London will suck you dry.

Zer0head's picture

Hey Tylers ... WTF is going on in Kanada??

Sonny boy Jared just stood up pretty boy Justin.

http://www.cbc.ca/news/politics/trump-kushner-canada-trade-1.3947947

Kushner not coming

There had been plans for Trump's son-in-law, Jared Kushner, to travel to Calgary on Tuesday to speak with members of the cabinet about NAFTA and other topics, according to a senior source who spoke to CBC News earlier Monday. But by late afternoon those plans had fallen through.

"We can now confirm to you that no other officials from the U.S. administration, beyond Mr. Schwarzman, will be present here at the retreat," a spokesperson for the Prime Minister's Office said. "A high level of engagement between our government and the U.S. administration certainly continues."

Stuck on Zero's picture

Sadly, most of those affordable cities are shit holes.

Xena fobe's picture

So are the unaffordable ones.

wee-weed up's picture

I can't speak for the rest of the world, but the top US least affordable cities mentioned are all huge Liberal bastions!

Manthong's picture

“Of course, for anyone who still doubts the source of the 2006/2007 U.S. housing bubble, the relationship between median incomes and housing prices remained fairly constant in the U.S. right up until the Fed decided to utilize near-zero interest rates to manage stock prices shortly after the 2000 tech bubble burst..”. 

But the Fed had help creating the crisis as Bawney Fwank & Co. leaned on the banks and Fannie and Freddie to make NINJA loans SOP.

Mine Is Bigger's picture

I see big Chinese invovlment in most of those places.

rpboxster's picture

So are the last 4 on the list.  Most big cities are.

dweller's picture

That's exactly the problem. Take Philadelphia for example, a large city with a large land area. At least 30% of that land area suffers from extremely poor infrastructure, high crime, bad schools, litter everywhere, vacant lots, or some combination of the above. 30% of the land area probably has a median sales price of about $50K for a 1400 square foot house, if that. So if you remove the uninhabitable part of the Philadelphia, the median multiple pops much much higher because you remove a lot of the transactions in the overall pool which are low value. You are left with a small amount of high value transactions. In much of Philadelphia the home ownership rate is falling through the floor due to UNaffordability in many of the good neighborhoods, so people rent instead of buy. I bet that median multiple adjusted for "poor conditions" is at least 3 times more.

philipat's picture

There seems to be a correlation between affordability and places (rightly or wrongly) that people actually want to live. Just a coincidence I'm sure.........

Motasaurus's picture

That's cute. About 60% of Sydney's land area suffers all the ills you just described, but the meddian sales price for a 1400 square foot house is ~$750 000

dweller's picture

I HIGHLY doubt that Sidney suffers from the same level of urban issues as Philadelphia. Watch the ABC Nightline special Badlands Death of an American Neighborhood on youtube. Or watch the National Geographic special "Philly Dope".

JMT's picture

sounds like Boston except the "30% of the land" that meets the criteria above is being rapidly gentrified by wealthy college kids & recent college grands (thru mommy & daddy of course)  so a triple decker that may have cost $150,000 20 years ago is now listed for 1.5 million.  I am talking about the parts of Boston that you 'don't see' on any tourist map

steve2241's picture

I hope Trump doesn't consider Kushner one of the country's "world-class negotiator's". Gimme a break.  The father, maybe. Sending Kushner Jr. up there is out-and-out nepotism.

Delving Eye's picture

And a major diss to Canada. Lil Justin probably felt snubbed with Kid Kushner playing delivery boy.

BorisTheBlade's picture

Well, Tillerson isn't yet confirmed by the Senate. They better hold their pants for when big artillery arrives, it would be a whole different game. I would be wise at the very least to listen to what he had to say, if it's too low for PM, send some representative.

gratefultraveller's picture

Great article.

"There had been plans for Trump's son-in-law, Jared Kushner, to travel to Calgary on Tuesday to speak with... by late afternoon those plans had fallen through."

as in

"TPTB had tried to manipulate the Trump admin into partecipating, and he told them to fuck off"

 

 

gespiri's picture

Well, if you're a foreigner looking to buy, then yes.  But if you're earning a local salary, then it is quite reasonable.

The only good thing is that Swizterland requires a strict 20% downpayment.  Also, the tax laws are designed to discourage owning multiple homes for investment purposes.

firestarter_916's picture

Due to ridiculous currency inflation.  The UK used to be 2-1. Those bloody bastards could buy properties in the UK with cash because the GBP was ludicrously high.  Now it's come down to earth. For now. Those Brits and Scots actually gotta work for a living rather than let their govt prop up their standard of living around the world.

Billy the Poet's picture

Pittsburgh is right there with yinz guys.

Francis Marx's picture

Its amazing how just like that, a tidal wave or some other disaster could make anyone of those cities no better then Detroit. Like Japan and the tsunami. All material things just became meaningless. Everyone was suddenly looking at their soul.

Antifaschistische's picture

Why are the blm hotspots all green! This thing is rigged!! :)

reader2010's picture

Interesting and sad to see Bournemouth is Number 10 on the list now,  but when I lived there some three decades ago,  it wasn't the baddest in the UK at the time.

poland spring's picture

VERY EASY TO EXPLAIN.

Aside from Europe, its whatever is close to CHINA.

Xena fobe's picture

You got it.  These are all cities with large Chinese polulations.  The great "benefits" of outsourcing. 

Elco the Constitutionalist's picture

At least I only live in a top 20 city. It could be worse.

new game's picture

proud to say i don't live in a shithole, there, fixed it...

Jason_1sandal's picture

This article fails to mention that 36 out of the 46 least affordable cities are in the U.S. 

Muppet's picture

If tax is not included.... its meaningless.   Many have property tax above $15k.   That trumps all. 

new game's picture

1250/month forever and will rise...

gov.org strip mining wealth for yours and mine, yes a better education, from guess who: the libtards that got this mess tothe  crisses it is....

Mr. Big's picture

Living in HK just cracks me up so much I bust a nut...honestly who the fuck wants to live there?.............

Shed Boy's picture

Why? Other then having expensive housing, it's a decent city. It's clean, lots of good restaurants, nice hotels and Disneyland. I've been there several times and liked it. Now LA...thats a shit hole, who would want to live there? So is Vancouver.

r3phl0x's picture

LA is a truly awful place to be middle class, but if you're hyper rich you get access to some of the best pussy on Earth, and if you're poor, you can smoke weed on the beach using Other People's Money.

sinbad2's picture

Victoria Peak has staggeringly beautiful views, and probably more millionaires per square mile than anywhere on earth.

bintercorp's picture

Sydneys market = Hong Kongs. They're mostly responsible for it.

PGR88's picture

Where's Buffalo NY on the list???

Free Man's picture

Can't see them, covered in snow.

besnook's picture

the only 2 places that make sense are honolulu and hong kong. land scarcity is a legitimate reason for real estate appreciation. a very little known secret is you can still buy a decent house on the big island for less than 300k. get it while you can.

new game's picture

islands are not for me. sorry i need land mass by the thousands of square miles...

idontcare's picture

Ashes, ashes, it all falls down! 

Boondocker's picture

Pretty much a list of places I don't want to live..

kiwigal's picture

The National Party of New Zealand has screwed Aucklanders over, immigrants from China and India have been flooding in over the past 8 years. On top of that they allow mainland Chinese to buy our properties; in a country that prided itself on being egalitarian that's all gone. Young people have zero chance unless they have wealthy Mummy and Daddy to foot the bill.  It is a country that is all smoke and mirrors.

Mr. Schmilkies's picture

If you don't mind sleeping in a box, you can live anywhere.

shankster's picture

Like Portland OR where they fill the streets with people in boxes and tents.

Chet Ricco's picture

You would think it would be Chicago or Detroit. Living there could cost you your life.

Chris88's picture

Anecdotally I think San Francisco is way worse than Hong Kong.

Free Man's picture

Indeed, San Francisco has so many lazy, non-productive, STD carrying Marxists.

So it follows that lazy, taking San Franciscans receive more taxpayer's money than they pay out, a lot more.

Genby's picture

SF is a child-free city. Only 13% of city population are younger than 18, comparing to 23% US average.