A report released today by Demographia, a housing affordability surveyor, indicates that Vancouver has one of the world’s least affordable housing markets.
Three hundred and twenty-five English speaking metropolitan areas are examined in the worldwide survey. Cities are ranked based on their median home price relative to median pretax household income — dubbed the “Median Multiple” in the report.
A Median Multiple of 3 and under is considered affordable while 5.1 and over is “severely unaffordable”. According to the report, Vancouver’s median home price of $678,000 is 10.6 times its median household income of $63,800.
Vancouver nabbed the number two spot from Sydney, Australia, which had a median home price to income ratio of 9.2 this time around. Hong Kong stood at 12.6, a ratio that surpassed the previous high of 11.5 for Los Angeles in 2007.
“Housing affordability generally improved in the surveyed nations, though the most unaffordable markets, Hong Kong and Vancouver, became even more unaffordable,” the reports authors wrote.
“The Median Multiple has escalated sharply in the past decade in Australia, Ireland, New Zealand, and the United Kingdom and in some markets of Canada and the United States,” the report says in another section.
The authors of the report are Wendell Cox, the principal of Demographia and Hugh Pavletich, the managing director of a commercial developer in New Zealand. This is the 8th annual report that Demographia has released.
So what will Vancouver do about this perceived problem with affordability?
In a recent column in the Vancouver Sun, Bob Ransford, a public affairs consultant with COUNTERPOINT Communications and former real estate developer, outlined some ways to address the affordability challenge. Here’s a few highlights from his piece:
- Employers have had difficulties attracting talented people to work in Vancouver because of the high cost associated with housing
- While many are predicting a slowdown in price growth in 2012, short-term downturn in housing prices won’t solve the problem
- Cities should view new housing developments as new shelter for their denizens, not “some commodity from which we can magically extract an economic benefit that can be used to finance other community needs”
- Cities need to stop extracting huge fees from new developments
- Commit to more compact, green and adaptable neighbourhoods and get serious about density in all of its forms
- Freehold attached townhouses should be as easy to register as a detached single-family home
- Stacked townhouses and more loft-type designs should be permitted and if they work, they should be repeated
Without a doubt, that’s some interesting food for thought!