Survey Highlights Unaffordable Property Markets
Ouch, it’s bad news for those hundreds of thousands of people who are planning on relocating to the southern hemisphere. The 2008 Demographia International Housing Affordability Survey has ranked the New Zealand and Australian housing markets as the most unaffordable in the English-speaking world.
The survey examined 227 urban markets in the United Kingdom (28), Republic of Ireland (6), Canada (29), the United States of America (129), Australia (28) and New Zealand (7) and rated them by the ‘median multiple’ method, the method recommended by the UN and the World Bank, where the average house price of a market is divided by the average annual household income.
Overall, the New Zealand and Australian urban markets have the worst housing affordability at 6.3 times its annual household earnings, followed by the United Kingdom (5.5) Ireland (4.7), the United States (3.6) and Canada (3.1).
The way in which the survey grades property is defined along clear parameters: property worth less than 3 times the annual salary is judged ‘affordable’; three to four times ‘moderately unaffordable’; four to five times ‘seriously unaffordable’ and property over five times the annual household income as ‘severely unaffordable’.
It’s particularly bad for New Zealanders when interest charges on mortgages are taken into account: based on local average rates, the average mortgage holder a massive 18.6 years of income to go towards house cost and mortgage interest (excluding rates, taxes, maintenance and other costs); Australians 17.9 years, the British 14.1 years: the Irish 9.6 years; the Americans 8.3 years and the Canadians 7.9 years. Co-author of the Annual Survey Hugh Pavletich said that evidence of the housing affordability crisis is “clear, overwhelming and irrefutable”, and urged governments to appreciate the importance of allowing affordable housing to be built on the fringes of large urban areas.
The Hotlist
United Kingdom
The UK has no ‘affordable’ or ‘moderately unaffordable’ markets. Some 25 of the 28 markets in the UK are ‘severely unaffordable’ and three markets are ‘seriously unaffordable’. The most unaffordable markets are Bournemouth & Dorset (8.9), Belfast (8.8) and Exeter & Devon (8.2). Among the larger markets, London (7.7) is the least affordable.
Australia
There are no ‘affordable’ or ‘moderately unaffordable’ markets in Australia. Some 25 of the country’s 28 markets are rated as ‘severely unaffordable’. The small coastal town of Mandurah in Western Australia is Australia’s most expensive property market at 9.5 times the medium salary.
Canada
In Canada, there are 13 ‘affordable’ markets, eight ‘moderately unaffordable’, 3‘seriously unaffordable’ and 4 markets are rated as ‘severely unaffordable.’ The least affordable is Kelowna (8.5).
Ireland
Ireland has no ‘affordable’ markets and has the only ‘moderately unaffordable’ market - Limerick (3.5) - outside of Canada and the United States.
New Zealand
New Zealand is the only surveyed nation in which all of its markets are ‘severely unaffordable’.
United States
In the US, there are 46 ‘affordable’ and 30 ‘moderately unaffordable’ markets. 25 markets are rated as ‘seriously unaffordable’ and 28 ‘severely unaffordable’. The US has the most unaffordable housing among the surveyed nations, but also has some of the most affordable.
So if you had the misconception that moving down under might save you money, think again. Given the numbers of Aussies and New Zealanders heading to the UK in the hope of finding better job opportunities and making money than back home, the dream of a lower cost of living and better quality of life may not be all its cracked up to be if the dream is unaffordable.
