Australia, UK, America
According to a new study by Demographia, the least affordable housing markets in the world are in Hong Kong, Australia, New Zealand, UK, Hong Kong, and Vancouver, with America proving to be comparatively affordable, in fact, the most affordable English speaking nation.
Overall, the median home price in America was three times pre-tax household income in 2011 which Demographia calls “affordable.” In 2007, the ratio in major metro areas was 4.6, which has dropped to 3.1 in 2011. Contrast that with an index of 12.6 in Hong Kong, 4.5 in Canada and 6.7 in Australia.
The most affordable major markets in the U.S. are now Detroit with a ratio of 1.4, Atlanta at 1.9, followed by Phoenix, Rochester, Cincinnati, Cleveland and Las Vegas. Demographia reports, “The strong growth markets of Dallas-Fort Worth, Houston, Orlando, Jacksonville, Nashville, Oklahoma City, Sacramento and Indianapolis also achieved affordable ratings.”
Many cities in America are in the “unaffordable” range, however, and the least affordable markets are San Jose (6.9), San Francisco (6.7), San Diego (6.1), New York (6.1), Los Angeles (5.7) and Boston (5.3), with the report pointing to land use regulations driving prices up as supply is choked.
“The bubble is over – prices have continued to decline. We have housing prices back to where they’re supposed to be,” said Wendell Cox, principal of Demographia which is based in Belleville, Illinois.
igns have appeared in recent months that the U.S. housing slump may have touched bottom and economists mostly expect prices to remain flat in 2012 before small gains next year.
Because we are still to close to the situation as a nation, there is not a consensus among economists as to the cause of the foreclosure crisis, the accelerant, or when the collapse will be over. Some say that housing and finance are in recovery mode, others say we have yet to hit bottom, while others say we are bouncing at the bottom. The Demographia report will likely be used by pundits to point to a recovery, but we should note that the economic crisis was not exclusive to America, so it is all relative.