Preserving the "Ideal of a Property Owning Democracy:" Annual Demographia International Housing Affordability Survey

sub-montreal.jpg

Demographia and Performanceurbanplanning.org  have just released the 8th Annual Demographia International Housing Affordability Survey, with an introduction by Professor Robert Bruegmann of the University of Illinois at Chicago and author of Sprawl: A Compact History. The Survey is unique in providing cross-national housing affordability comparisons using the median house price data from leading indexes in Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom and the United States.

The Demographia International Housing Affordability Survey employs the “Median Multiple” (median house price divided by gross annual median household income, before taxes) to rate housing affordability (Table 1). The Median Multiple is widely used for evaluating urban markets, and has been recommended by the World Bank and the United Nations and is used by the Harvard University Joint Center on Housing.

Table 1

Demographia Housing Affordability Rating Categories

Rating

Median Multiple

Affordable

3.0 & Under

Moderately Unaffordable

3.1 to 4.0

Seriously Unaffordable

4.1 to 5.0

Severely Unaffordable

5.1 & Over

Historically, the Median Multiple has been remarkably similar in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States, with median house prices having generally been from 2.0 to 3.0 times median household incomes (historical data has not been identified for Hong Kong). This affordability relationship continues in many housing markets of the United States and Canada. However, 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. There has also been a substantial loss in affordability in recent years in Hong Kong.

Housing Affordability in 2011

Housing affordability was little changed in 2011, with the most affordable markets being in the United States, Canada and Ireland. The United Kingdom, Australia, New Zealand and Hong Kong continue to experience pervasive unaffordability (Figure 1).

The Survey covers325 metropolitan markets, including the 81 major markets with more than 1,000,000 population (Table and Chart Attached). There were 24 affordable major markets, 20 moderately unaffordable major markets, 13 seriously unaffordable major markets and 24 severely unaffordable major markets (Table 2). The severely unaffordable major markets were principally in the United Kingdom (8), the United States (6), and Australia (5). Hong Kong was severely unaffordable and there were three severely unaffordable major markets in Canada and one in New Zealand (Table 2). Australia had the highest major market Median Multiple outside Hong Kong (Figure 2).

 

Table 2

Housing Affordability Ratings by Nation: Major Markets (Over 1,000,000 Population)

 Nation

Affordable (3.0 & Under) 

Moderately Unaffordable (3.1-4.0)

Seriously Unaffordable (4.1-5.0)

Severely Unaffordable (5.1 & Over)

Total

National Median

 Australia

0

0

0

5

5

6.7

 Canada

0

3

0

3

6

4.5

 China (Hong Kong)

0

0

0

1

1

12.6

 Ireland

0

1

0

0

1

3.4

 New Zealand

0

0

0

1

1

6.4

 United Kingdom

0

0

8

8

16

5.0

 United States

24

16

5

6

51

3.1

 TOTAL

24

20

13

24

81

 

The most affordable major market was Detroit, with a Median Multiple of 1.4. This Median Multiple is artificially low, arising from the collapse of housing demand in the most severely depressed major market in the United States. There were another 22 affordable major markets, the most affordable of which were Atlanta, Phoenix, Rochester, Cincinnati, Cleveland and Las Vegas. The strong growth markets of Dallas-Fort Worth, Houston, Orlando, Jacksonville, Nashville, Oklahoma City, Sacramento and Indianapolis also achieved affordable ratings.

All major markets in Australia and New Zealand, as well as Hong Kong were severely unaffordable.
Hong Kong was the least affordable major market (ranked 81st), with a median multiple of 12.6. Vancouver was second most unaffordable, at 10.6 (ranked 80th). Sydney was the third most unaffordable, at 9.2 (ranked 79th).  Melbourne and Plymouth & Devon all had Median Multiples above 7.0.

Among all 325 markets surveyed, there were 128 affordable markets, 117 in the United States, 9 in Canada and 2 in Ireland. There were 71 severely unaffordable markets, principally concentrated in Australia and the United Kingdom (Table 3). Honolulu and Bournemouth & Dorsett (8.7) were the least affordable outside the major markets.

Table 3

Housing Affordability Ratings by Nation: All Markets

 Nation

Affordable (3.0 & Under) 

Moderately Unaffordable (3.1-4.0)

Seriously Unaffordable (4.1-5.0)

Severely Unaffordable (5.1 & Over)

Total

National Median

 Australia

0

0

7

25

32

5.6

 Canada

9

19

1

6

35

3.5

 China (Hong Kong)

0

0

0

1

1

12.6

 Ireland

2

3

0

0

5

3.3

 New Zealand

0

0

3

5

8

5.2

 United Kingdom

0

1

12

20

33

5.1

 United States

117

64

16

14

211

3.0

 TOTAL

128

87

39

71

325

 



Preserving the "Ideal of a Property Owning Democracy"

One of the principal accomplishments of high-income world societies has been the expansion of property ownership and home ownership to the majority of the population. At the same time, there are dark economic clouds on the horizon. Governments in high income nations are faced with some of the most challenging times in their history. In this environment, the property owning middle class is likely to face significant challenges in the longer run. Since housing is largest element in household budgets, unaffordable housing is a serious threat to the standard of living.

At the same time, the economic evidence shows that more restrictive land use regulations, such as urban growth boundaries, have been an important factor in the deterioration of housing affordability. On this point, economist Anthony Downs of The Brookings Institution stressed the importance of maintaining the "principle of competitive land supply." The escalation of house prices relative to incomes, from Sydney and Vancouver to London and across California testify to the failure of planning to maintain that principle. The record shows that smart growth (urban consolidation and compact cities policies) is incompatible with housing affordability.

But there are signs of hope. Florida repealed its growth management law ("smart growth") in 2011. Further, a recent New Zealand government report outlined the importance of a competitive land supply in restoring housing affordability to that nation.

Four decades ago, urbanologist Peter Hall expressed concern about the threat of such policies to the "ideal of a property owning democracy." The Demographia International Housing Affordability Survey is dedicated to younger generations who have right to expect they will live as well or better than their parents. In large measure due to land use planning that has made housing unaffordable, they may not.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life

----

Note: The 8th Annual Demographia International Housing Affordability Survey is sponsored in Canada by the Frontier Centre for Public Policy.

Photo: Suburban Montréal (by author)



















AttachmentSize
dhi-major-metropolitan-schedule.pdf132.03 KB

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Home Security systems

its true, the expensive homes are a threat for our every day need's cost. but one thing also very important for our homes, that is Home Security systems

Saw Palmetto Prostate Arccfn

With those, you hold the gun in a different angle every once in a while and get the blow in you face or into the dust etc. I share them with my associates, who really enjoy them, as well. I highly recommend this product to anyone shopping for one! Best of all, amazon has the best prices! Saw Palmetto Ziola http://sawpalmettoprostate.arccfn.org.au/500/radioactive-prostate-treatm...
I'm hoping this is just a fluke tank, but the fact that it's happened at all is disappointing and ruins the purchase. He loves them and I love using them at the lower weights. It has been effective in eliminating smoke and quieter than most. Flaxseed Benefits For Prostate Cancer http://sawpalmettoprostate.arccfn.org.au/1/sawpalmettoprostate/ Leki Z Saw Palmetto

Subwoofer Amp http://www.aichelocal.org

$100 to the service department to tell me "unplug the tuner" I hope the person I try to sell the piece of junk to doesn't read this review. I do not have a tripod yet so I braced my elbows on the front porch. To me this made this one product so much better than the many exercise products that accommodate only a limited range of motion. It makes me more angry and my husband have noticed it too. Difference Cable Subwoofer http://www.aichelocal.org/86/aichelocal/?pagenum=3
It mixes well with all these liquids, tastes a little bland with water. At $15 for a new tray, that could get very costly. I couldn't ask for more in a free app. Labyrinth Sub Box Reviews http://www.aichelocal.org/86/aichelocal/?pagenum=3 Subwoofer Placement Two

You provide the best idea of

You provide the best idea of Affordable houses and hope many people will get advantage from you article but if you want web designer then share.

great

Awesome to be viewing your website once more, it's been several weeks on part of me. Well this written text that I’ve been patiently waited for such a lengthy time.Promo Kartu Member Indomaret Minimarket Waralaba Indonesia

Real Estate Value

Since the crash of 2008, it seems that nothing is too stable nowadays. Real estate is suppose to be one of those things that are considered "safe investments" but that was proven wrong over the last few years. For example, apartments Upper West Side in New York have plummeted almost 10% of their values but for some reason, the state taxes seem to go up every year. There is just something wrong about that

property ownership

Real estate ownership is one of the biggest driving forces to live in the United States - It's half of the American dream, and its no wonder that people have already started turning to breaking and entering, robbing, and violent crime in order to get property of their own. The economic recession was tough on a lot of people, and the increase in crime across America is proof that we need to do something about this. The mere fact that we need home security systems in order to feel safe in SMALL towns speaks for itself. There just doesn't seem to be any aspect of community like there used to be... sad times.