U.S.-based Demographia.com and New Zealand-based Performance Urban Plannning have released their 6th annual index of housing affordability covering six nations: the United States, United Kingdom, Australia, New Zealand, Ireland, and Canada.
The index is calculated using the "median mulitiple", or the median home price divided by the median household income. This is a standard rule-of-thumb in the real-estate world: A household should be able to afford a mortgage three times its household income and/or a home four times its household income if they contribute at least 20 percent to their downpayment.
The most affordable housing markets in the survey are, not surprisingly, in the U.S. They include the economically depressed Detroit, the reasonably healthy Indianapolis, as well as the high-growth urbanized areas of Houston, Dallas-Fort Worth, and Atlanta.
I was surprised at the least affordable: Canada's Vancouver, Britich Columbia; Australia's Sydney, Melbourne, and Adelaide; and London, England. New York (+New Jersey-Long Island-Connecticut and parts of Pennsylvania) came in sixth, followed by San Francisco. Perth and Brisbane, two more Australian cities, came in eigth and ninth while Auckland, New Zealand rounded out the top ten among the least affordable.
One of the hallmarks of the least affordable urbanized areas, according to co-authors Wendell Cox and Hugh Pavletich, is the high degree of regulation that limited housing supply and/or land for housing.
The index is well worth scanning.