Demographia International Housing Affordability Survey
Hugh Pavletich (Performance Urban Planning) & Wendell Cox (Demographia}
January 24, 2011
325 MAJOR URBAN MARKETS
IRELAND NEW ZEALAND
UNITED KINGDOM UNITED STATES
& HONG KONG (CHINA)
HOUSING AFFORDABILITY - HOW DOES YOUR CITY RATE?
The 2011 7th Annual Demographia
International Housing Affordability Survey
This Annual Survey has been called the "gold standard" for assessing housing affordability of the urban markets it covers - and will be expanded to other markets going forward, as more robust data on house prices and household incomes become available.
HOUSING SHOULD NOT EXCEED 3.0 TIMES GROSS MEDIAN ANNUAL HOUSEHOLD INCOME
For housing markets to rate as "affordable", housing should not exceed three times gross annual household income (the Median Multiple). If this "affordability threshold" is breached, it indicates local political impediments to the provision of affordable housing that need to be dealt with.
Housing markets are rated as "affordable" at or below 3 times gross annual household income (Median Multiple), "moderately unaffordable" at or below 4 times income, "seriously unaffordable" at or below 5 times income and above 5, rated "severely unaffordable".
HONG KONG MOST SEVERELY UNAFFORDABLE METROPOLITAN AREA
AUSTRALIA MOST SEVERELY UNAFFORDABLE COUNTRY
Hong Kong has the most unaffordable housing of the 325 urban markets surveyed, with housing at 11.4 times household income, followed by Sydney, Australia at 9.6 and Vancouver, Canada at 9.5
Of the countries surveyed, Australia (32 urban markets) has the most intense housing stress with housing prices at 6.1 times household incomes, followed by New Zealand (8) at 5.3 times, United Kingdom (33) at 5.2, Ireland (5) at 4.0, Canada (35) 3.4 and the United States (211) with overall the most affordable housing at 3.0 times gross annual household incomes.
There are 115 affordable housing markets (all in the United States and Canada), 94 moderately unaffordable markets, 42 seriously unaffordable markets and 74 severely unaffordable markets.
27 of the 32 Australian housing markets are severely unaffordable, with the remaining 5 seriously unaffordable.
MAJOR URBAN MARKETS - ONE MILLION POPULATION +
For the first time, the Annual Demographia International Housing Affordability Survey additionally separates the 82 major urban markets with populations exceeding one million. There are 20 affordable major urban markets, with 25 moderately unaffordable, 13 seriously unaffordable and 24 severely unaffordable markets.
fast growing Atlanta, Georgia, USA is the most affordable of
the 82 major metros, with housing prices at 2.3 times
household income. Being an "open market", Atlanta over
produced market priced housing, but did not bubble.
SURVEY INTRODUCTION - ACCLAIMED AUTHOR JOEL KOTKIN
"Little discussed have been the social and economic implications of such policies (strangling urban expansion). Although usually thought of as "progressive" in the English speaking world, the addiction to "smart growth" can more readily be seen as socially "regressive". In contrast to the traditional policies of the left of center governments that promoted the expansion of ownership and access to the suburban "dream" for the middle class, today regressive "progressives" actually advocate the closing off of such options for potential homeowners."
"....It is a very dangerous concept, essentially promoting a form of neo feudalism which reverses the great social achievement of dispersing property ownership."
"...But perhaps most remarkable has been the shift in Australia, once the exemplar of moderately priced, high quality middle class housing, to now the most unaffordable housing market in the English speaking world."
The Introductions to earlier
Surveys had been provided by Australian environmental
scientist Dr Tony Recsei
AFFORDABLE HOUSING MARKET DEFINED
Pavletich of Performance Urban Planning
"For metropolitan areas to rate as "affordable" and ensure that housing bubbles are not triggered, housing prices should not exceed 3.0 times gross annual household earnings. To allow this to occur, new starter housing of an acceptable quality to the purchasers, with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual median household income of that urban market (refer Demographia Survey Schedules for guidance)."
"The critically important Development Ratios for this new fringe starter housing should be 17 - 23% serviced lot - the balance the actual housing construction."
The fringe is the only supply / inflation vent of an urban market."
There is a truism, well understood by responsible developers and real estate financiers internationally -
"If you get the land price wrong - everything else is wrong."
Due to unnecessary politically inflated land costs, housing markets are "very wrong" in Hong Kong, Australia, New Zealand, the United Kingdom, Ireland and some parts of Canada and the United States.
RESTORING HOUSING AFFORDABILITY - RELEARNING HISTORY
Soon after World War 11, during the
era of Democrat President Harry S. Truman
As the horrific World War 11 drew to a close, political authorities internationally were acutely aware of the political costs following the conclusion of World War 1, when social conditions were neglected. This led to social disruption in the United States, the spawning of fascism in Germany and this is turn led to World War 11. In the United States, the political authorities ensured the political and commercial barriers to the provision of affordable housing were effectively dealt with. In 1944 housing starts were just 114,000. By 1950 they were 1.7 million (refer The GI Bill of Rights - Changing the social, economic landscape of the United States <http://www.america.gov/st/educ-english/2008/April/20080423213340eaifas0.845 4951.html> ).
The disciplined and consumer focused
Levitt methods of construction spread quickly throughout the
United States and other countries, including France (refer
France: A Lesson from Levitt - TIME
"Postwar prosperity has enabled Western Europe to catch up with the US standard of living in such basic human needs as food and clothing. When it comes to housing, though, most of the Continent still lags decades behind."
"New European housing often looks elegant from the outside, but much of it is backwards in kitchen equipment, bathroom layout, floor plans, heating, plumbing and lighting - the innards that make the shell truly livable."
"Thus it is not surprising that the French have enthusiastically greeted an invasion by Long Island's William J Levitt, the US's biggest homebuilder. More than 60,000 Frenchmen have poured out of Paris to gape at Levitt's recently opened American style subdivision in suburban Le Mesnil-Saint - Denis."
"So desperate is France's need for more housing that even Levitt's French competitors cheer his venture - the first such in Europe by a US builder. 'He's helping to fill the need,' says Builder Jacques Boulais 'and he's giving French contractors a good lesson in the modern way to build a house'."
In large part - restoring housing
affordability requires relearning history. And learning from
the growing affordable housing markets identified within the
Annual Demographia International Housing Affordability
Survey. Particularly Texas - with its open land markets,
appropriate financing of infrastructure with the bond