Demographia International Housing Affordability Survey
7th Annual Demographia International Housing Affordability
Survey Hugh
Pavletich (Performance Urban Planning) & Wendell Cox
(Demographia} January 24, 2011 325 MAJOR URBAN
MARKETS OF AUSTRALIA CANADA IRELAND NEW
ZEALAND UNITED KINGDOM UNITED STATES & HONG KONG
(CHINA) INTRODUCTION 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. The
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 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 Hugh
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 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
financed Check out what they pay for housing in Houston (refer
Houston Association of Realtors ENDS
HOUSING AFFORDABILITY - HOW DOES YOUR CITY
RATE?
) - and ask - "why aren't I paying the same price in my own
city?".