Since we are living in a globally interconnected economy, the ups and downs of one area’s economy can have a significant impact on the economic position of another. The foreign economy is a hot issue for entrepreneurs looking to invest abroad. If someone is launching a firm on a global scale, he may have to reside in a foreign country to monitor his investment.
With home prices still skyrocketing in many cities, it’s no surprise that many Americans are still struggling to own a home. Housing affordability continues to be among the most important issues for U.S. policymakers and the public at large.
Top 10 Least Affordable Cities to Buy a Home
Source: Demographia International Housing Affordability [1]
*Median Multiple: The “median multiple” is the ratio of median house price to median household income, expressed as a number of years’ income. Cities with high median multiples are much less affordable for typical homebuyers than those with low ones.
The most affordable cities had median multiples of 3.6 or below, while the least affordable cities had median multiples of 5.1 and above. Those with a median multiple of 5.0 or higher are considered severely unaffordable.
Based on the Demographia International Housing Affordability Survey report (2022 Edition), the following are the least affordable cities in the world:
1. Hong Kong
Hong Kong has long been known as one of the world’s most expensive cities to live in, but there’s a new reason why: housing costs. The median multiple in Hong Kong is 23.2x, which means it would take 23.2 years for someone earning the average salary to pay off their mortgage. Prices in Hong Kong have been rising for some time now; in fact, prices have risen by an average of 10% annually since 2000.
In addition, over 30% of Hong Kong live in public rental housing rather than owning their own homes [2]. Hong Kong is a densely populated city: its population density is over 6,659 people per square kilometer. [3]
2. Sydney
Sydney is Australia’s largest and most cosmopolitan city. It has a population of more than 5.3 million people (as of 2019) and is the financial capital of Australia. It is situated on the world’s largest natural harbor, and its climate is pleasant year-round. Sydney has long been known as one of the most beautiful cities globally. It is famous for its vibrant culture, excellent food, stunning beaches, and its friendly inhabitants.
According to a Deutsche Bank report on global economic conditions and financial markets, with a median home price of $1.2 million, Sydney is the world’s second-most expensive city for housing. [4]
In its second annual global housing affordability report, which analyzes home prices relative to income in 100 cities across the world, Oxford Economics said that home prices in Sydney are expected to increase at a faster rate than incomes over the next five years.
3. Vancouver
Vancouver has one of the most enviable settings of any city in the world. It is bounded by the Coast Mountains to the north, east, and west and by Georgia Strait to the south, making it a peninsula. The city is surrounded by water on three sides, separated from Vancouver Island to the west by the Strait of Georgia and from Washington State’s San Juan Islands to the south by the Strait of Juan de Fuca. This gives Vancouver one of its many nicknames, “City of Glass,” because many of its buildings have mirror-like glass exteriors that reflect mountains and water.
Vancouver has a population approaching 3 million. The metropolitan area is larger than Los Angeles or New York City, but it feels much smaller because it’s not spread out like those cities. Most visitors will never get farther than 8 kilometers (5 miles) from downtown.
With the average price of a home in Vancouver now at 1.2 million dollars, you may be surprised to learn that it was named the least affordable city in Canada to buy a home. The city’s sky-high house prices have forced many residents to look for housing outside the metropolitan area, but even then, it can be hard to find a place that fits your budget. [5]
The city’s median multiple — the median house price divided by gross annual median household income — is 13.3, which is more than double the affordable level of 3.0 or below.
4. San Jose
San Jose is known as “The Capital of Silicon Valley” as it’s located in the northern region of the Bay Area. It is the most populated city in the Bay Area and Northern California, with major high-tech companies based there. According to an analysis from Zillow, San Jose has the best property developers in the country.
According to some real estate websites, housing values in the San Jose metropolitan area have risen by about 32% since last year.
In the first quarter of 2022, San Jose home prices rose 21.2 percent compared to the same period last year, with homes selling for a median price of $1.4 million. On average, homes sold after eight days on the market, down from 11 days in the year-earlier period. [6]
5. Melbourne
Melbourne is the capital and Australia’s second-most populous city. It has a population of approximately 5.1 million, and its inhabitants are called “Melburnians.”
Melbourne rates highly in education, entertainment, health care, research and development, tourism, and sport; it is home to many leading sporting events, including the Australian Open tennis tournament, Melbourne Cup race, and Formula One Grand Prix.
Melbourne is home to four main universities: the University of Melbourne, Monash University, RMIT University, and Deakin University. The city also has a vibrant arts scene with numerous museums, art galleries, theatres, live music venues, and festivals.
Melbourne’s housing prices are rising faster than any other Australian city, and many believe the city is in a bubble. According to Sydney Morning Herald, if you’re looking for the least affordable place to buy a home in Australia, Melbourne is the place to be [7]. However, that doesn’t mean that Melbourne is about to surpass Sydney as the most expensive housing market in Australia. The median house price in Melbourne is AUD 1.4 million (USD 1.1 million), which is still well below Sydney’s median of AUD 2.1 million (USD 1.6 million). [8], [9]
6. Honolulu
Honolulu is the biggest city in the Pacific Ocean-bound United States state of Hawaii. It is also the fourth most expensive place to live in Hawaii [10].
Honolulu is also known as The Valley because of its location between the mountains and ocean.
The high price of homes in Honolulu is probably influenced by the fact that it’s not very far from Waikiki, home to much pricier real estate. But it’s also within easy reach of The University of Hawaii (Hilo) and Hawaii Community College at Hilo, which has a large share of the state’s student population.
7. San Francisco
The City of San Francisco is a historical, economic, and financial hub in California, United States. With 873,965 residents as of 2020, San Francisco, located in Northern California, is the 17th most populous city in the United States. [11]
The housing market in San Francisco is rather competitive, and there is a lot of demand. San Francisco is a very unaffordable place to reside in, especially for those on a moderate salary. But it’s also one of the country’s most famous and well-known locations.
According to a report, the median property value in San Francisco is $1.488 million (as of 2022). [12]
8. Auckland
Auckland is a city on New Zealand’s North Island. It is the most populous urban area in New Zealand, with a population of 1.6 million. Auckland is one of three regions that make up the Auckland Council. This council governs both rural and urban areas and also includes several offshore islands in the Hauraki Gulf.
The city is made up of a number of smaller towns, including Devonport, Takapuna, and Ponsonby on the North Shore; Mt Eden, Newmarket, Parnell, and Remuera in central Auckland; as well as Manukau in South Auckland; and Howick and Pakuranga in East Auckland.
Auckland is New Zealand’s most expensive city to buy a house in, but with a median house price of $404,000, the city is still an affordable option compared to other cities around the world. If you were thinking of buying an average-priced home in Auckland, you would need to fork out $660,000 for a three-bedroom house. [13]
9. Los Angeles
Los Angeles is the greatest city in California and the second-largest city in the United States. The city’s fast-increasing economy accounts for its high housing rates. After Tokyo and New York, Los Angeles has the world’s third-highest gross domestic product in 2018 and is the United States’ leading manufacturing center. [14]
In Los Angeles, rents are exceedingly high, where the median housing price is far more than $795,000. Rent and mortgage expenses account for over 72 percent of LA households’ income. [15]
According to a report by the real estate company Zillow, renters in Los Angeles need to earn $137,000 a year to afford the estimated 2 bedrooms apartment.
10. Toronto
Toronto is the capital of Ontario and the most populous city in Canada. It lies on the point of land at the northwestern end of Lake Ontario. With a population of 6.3 million, Toronto is at the heart of the Greater Toronto Area (GTA). The city of Toronto anchors the Golden Horseshoe region, which wraps around Lake Ontario from Toronto to Niagara Falls.
Toronto is renowned as a global center of business, finance, arts, and culture. The city is a blend of suburban areas and high-rise developments, with extensive parkland throughout. It’s divided into six boroughs, which include the former city of Toronto, as well as the cities of Etobicoke, Scarborough, North York, and York.
The average home price in Toronto is $1.3 million. [16]
Conclusion
Housing costs have risen far faster than household incomes across many regions of the world, making homeownership incredibly hard. Countries with a score of higher than 5.1 in the Demographic International Housing Affordability Survey are the least affordable cities to live in.
References
- http://www.demographia.com/dhi.pdf
- https://www.bycensus2016.gov.hk/en/Snapshot-05.html
- https://worldpopulationreview.com/countries/hong-kong-population
- https://www.domain.com.au/news/sydney-house-prices-to-fall-5-per-cent-over-next-two-years-according-to-bis-oxford-economics-20170309-guu6dq/
- https://bc.ctvnews.ca/home-sales-in-metro-vancouver-reached-record-high-in-2021-latest-real-estate-report-says-1.5728497
- https://www.redfin.com/city/17420/CA/San-Jose/housing-market
- https://www.smh.com.au/property/news/sydney-melbourne-among-top-five-least-affordable-cities-in-the-world-to-buy-a-home-20220316-p5a574.html
- https://www.abc.net.au/news/2022-01-27/sydney-median-house-price-increases-but-growth-expected-to-slow/100785706
- https://www.theage.com.au/property/news/melbourne-house-prices-jump-35-per-cent-in-less-than-three-years-20220210-p59vch.html
- https://www.homes.com/f/hawaii/homes-for-sale/top-10-most-expensive-cities/
- https://www.census.gov/quickfacts/sanfranciscocountycalifornia
- https://www.nbcbayarea.com/news/local/median-san-francisco-home-price-down-recently-but-up-compared-to-last-year/2778761/
- https://moverfocus.com/moving-to-new-zealand/
- https://worldpopulationreview.com/world-city-rankings/richest-city-in-the-world
- https://www.latimes.com/business/story/2021-11-04/what-l-a-countys-median-home-price-795-000-buys-in-six-areas
- https://www.theglobeandmail.com/business/article-torontos-average-home-price-hits-record-13-million-but-expected-to/
- https://advisorsmith.com/data/most-and-least-affordable-cities-for-homebuyers
