Australia has second-least affordable housing in the word

Demographia’s 12th annual survey divides median house prices by the gross annual media household income to assess housing affordability, a measure recommended by the World Bank and the United Nations.

The median home in Hong Kong costs 19 times the median annual pretax household income, the highest multiple Demographia has measured, and up from 17 in last year’s report, according to the company’s website. San Jose clocks up a multiple of 9.7, while San Francisco is close behind with 9.4.

A 40-square meter (430-square foot) flat would be expected to set a buyer back more than US$750,000, according to data from the Hong Kong Property Review.

“Three-quarters of Australia’s population growth will be in the four largest cities and each one of them is ranked “severely unaffordable”.

Hong Kong ranked the least affordable, while Sydney, Australia overtook Vancouver this year for the second-least affordable market.

A ratio of 3 or less is considered “affordable”, with Demographia arguing that most cities were at those levels prior to a global property boom starting in the 1980s and ’90s. The so-called median multiple puts Hong Kong in the category of “severely unaffordable”, along with any other metropolitan area where that figure tops 5.1.

Demographia also points out that Vancouver is one of five cities rated by UBS as being most vulnerable to risk from a real estate bubble.

Outside the big cities, Tweed Heads was the most costly place to live with a ratio of 9.3, while Bowral-Mittagong, the Sunshine Coast, Port Macquarie, the Gold Coast and Wollongong also had price-to-income ratios of 8 or more.

Now another study has indicated that Singapore is not even in the league of World’s least affordable metropolitan cities.

South Australian Family First Party Senator Bob Day, the former president of the Housing Industry Association, wrote the introduction to this year’s report describing recent house price movements as “devastating”.