It’s common knowledge that Vancouver real estate is the priciest in Canada, and well out of reach for the average middle-class buyer – but a new report finds it outprices most global markets as well.
The west coast city has been given the dubious distinction as third most expensive in the world according to the 13th Annual Demographia International Housing Affordability Survey, which ranked the following markets as the 10 priciest:
- Hong Kong, China
- Sydney, Australia
- Vancouver, Canada
- Auckland, New Zealand
- San Jose, United States
- Melbourne, Australia
- Honolulu, United States
- Los Angeles, United States
- San Francisco, United States
- Bournemouth & Dorset, United Kingdom
To determine the ranking, Demographia calculated each city’s “median multiple” score by dividing the median house price by median household income. An affordable market is considered below 3.0, moderately unaffordable between 3.1 – 4.0, a seriously unaffordable market at 4.1 – 5.0, and a severely unaffordable market at 5.1 and above.
Canadian Real Estate Cause for Concern: Report
Overall, Canada is considered a “seriously unaffordable” market with a score of 4.7, and a few concerning emerging issues, according to the report. “The health of the housing market has been deteriorating rapidly in Canada. Both international and national organizations have expressed concern about the damage that rising prices (some suggest a housing bubble) could do to the national economy,” Demographia states.
Of all Canada’s markets, two are within the severe category, and take a wild guess which ones: Vancouver ranks at 11.8, and Toronto at 7.7. In fact, as of 2004, Vancouver’s affordability has declined the most of all ranked markets.
“Vancouver has experienced the greatest housing affordability deterioration among major markets in the (report), with its medium multiple more than doubling from 5.4 to 11.8,” states the report.
Toronto real estate has also experienced a rapid decline in affordability, rising from a 2004 score of 3.9, and is considered the 13th least affordable of all global major markets. Other “seriously” unaffordable markets include Montreal (4.8), Calgary (4.6), and Edmonton (4.1). Ottawa-Gatineau is considered “moderately” unaffordable at 3.9.
So what’s a beleaguered home seeker to do? If you’re looking for a truly affordable place to live, head to the eastern provinces: New Brunswick cities Moncton and Fredericton boast low scores of 2.1 and 2.2 respectively.
Calling Out The Missing Middle
The report also highlights diminishing middle-income affordability as a major issue plaguing many markets, as housing prices escalate above household incomes, and that land-limiting policies were often to blame.
“… In many housing markets, house prices have skyrocketed compared to household incomes. The most severe house price increases have been limited to housing markets where urban containment policies (or its equivalent) have been implemented,” Demographia states.
“Generally, urban containment policy draws a development limit around the urban area and seriously limits or even prohibits greenfield development of housing tracts on the urban fringe.”
It has been argued that many of Canada’s housing price woes stem from such policies, including the urban containment policy in Vancouver, and Places to Grow program implemented on the fringes of the GTA.