For the third year in a row, Vancouver has ranked as the third least affordable city in the world in a Demographia report that analyzes home prices in nine countries around the world: Canada, the United States, Australia, China (Hong Kong), Ireland, the United Kingdom, Japan, New Zealand and Singapore.
The annual study takes into consideration the average home price as a multiple of the average median household income. Those cities with multiples of three or less are considered to be affordable, and those with multiples of 5.1 or greater are said to be severely unaffordable.
Vancouver’s multiple is 12.6, which means the average home price is 12.6 times higher than the average household income. Unaffordability is on the rise in the city; last year the multiple was 11.8, and in 2016 it was 10.6.
The city has been in the top three for six consecutive years. It has also been the least affordable city in Canada since Demographia began publishing the annual report in 2004.
“Vancouver had already developed a severely unaffordable housing market in the first survey [in 2004], which has been associated with its urban containment policy, adoped about five decades ago,” Demographia said in the report.
“Vancouver has experienced the greatest housing affordability deterioration among major markets in the Demographia Annual International Housing Affordability Survey, with its median multiple deteriorating from 5.3 [in 2004] to 12.6, equivalent to 7.3 years of pre-tax median household income.”
The report said that although prices cooled somewhat after the implementation of the foreign-buyer tax in August 2016, the effects of this tax appear to have been temporary, as prices have increased 11% year-over-year, which is four times higher than the increase in annual earnings.
The least affordable cities in the world were, once again, Hong Kong (19.4) and Sydney (12.9).