House prices have surged well past economic fundamentals in Canada for at least a decade, with many international and national organizations expressing concern over the potential damage rising prices could have on the nation’s economy.
Vancouver was ranked the third least affordable major housing market in world, right behind Hong Kong and Sydney at the number one and two spots respectively, according to the 14th edition of Demographia International’s annual Housing Affordability Survey.
Dwelling Costs Outweigh Incomes
The survey rates middle-income housing affordability using a measure known as the median multiple. This measure captures the median house price divided by the median household income in a given market. A median multiple of 5.1 means a dwelling costs more than five times the average annual household income, and is classified as being “severely unaffordable”.
Toronto and Montreal Also Make List
Vancouver’s jaw-dropping median multiple of 12.6 is the third worst among the 92 metropolitan areas analyzed, and is the third worst in the survey’s history. Only Hong Kong and Sydney have posted less affordable median multiples.
“Vancouver has experienced the greatest housing affordability deterioration among major markets in the Demographia Annual International Housing Affordability Survey,
with its Median Multiple rising by more than 2.35 times, from 5.3 in 2004 to 12.6 in 2017,” the survey said. “The 2017 UBS Global Real Estate Bubble Index rates Vancouver as tied (with Sydney) for the fourth worst housing ‘bubble risk’ in the world.”
Toronto also has a severely unaffordable housing market, with a median multiple of 7.9.
Other unaffordable Canadian markets include Montréal (4.5), Calgary (4.1), and Calgary (4.1).
For the sixth consecutive year, Moncton was the most affordable housing market in Canada, with a median multiple of 2.1.
“Fredericton (NB) and Fort McMurray (AB) have affordable Median Multiples of 2.2 and St. John (NB) has a Median Multiple of 2.3. There are seven other affordable [Canadian] markets,” the survey said.