I just found this story in the sun from way back in January – It’s about a study that ranked cities housing affordability based on the ratio between median house prices and median income, and guess what – Vancouver was rated worst in Canada, and 15th worst city in the world for affordability at that time.
This is the second year for the survey, which was developed to compare housing affordability around the world, the report’s co-author Hugh Pavletich said in a telephone interview from New Zealand.
“We felt there was a desperate need for an easily understood measure of housing affordability both within countries and across borders,” Pavletich said. “So it doesn’t matter what currencies we’re talking about, or even the house prices and the household incomes. The key thing is the multiple of household income it takes to buy a home.”
This multiple should not be greater than three, Pavletich said. He called Vancouver’s index of 6.6 “bloody absurd.”
“Historically back in the 1970s and 1980s within the property industry, it was always considered a rough rule of thumb that people should not have to spend any more than three times their household income to buy their homes,” he said.
Now as house prices get “out of hand,” this guideline has faded from public view, Pavletich said.
See? Things are different now! And since things are different that means the prices will never go down. Maybe ‘bloody absurd’ is the new reality?
In unaffordable cities, the key problem was the “strangulation of land supply” by local government, Pavletich said. Not allowing enough land to be developed was creating an artificial scarcity which is driving prices up, he said.
Three cities in Canada made the most affordable list with Winnipeg in third place worldwide with a house price to income ratio of 2.4, followed by Edmonton and Quebec City, tied at 14th with an index of 2.8.
The United States, with the world’s most unaffordable real estate, also had the most affordable, with indices of 2.2 in both Buffalo and Rochester, N.Y.
Pavletich hopes the survey will get people to question housing affordability and urge governments to actually set housing affordability targets.
Hmm.. I wonder how much of a role government can play in prices. Obviously things like interest rates and employment factors have some impact on prices, but is the current boom due to ‘not enough land’ to build on? If they opened up the land just northeast of terminal and main would that make a difference? Should they open up Stanley Park, Jericho beach park and the UBC endowment lands to condo developments?