January 25, 2010
Media Release - How Affordable is Your Housing?
The Frontier Centre releases its 6th annual international comparison of housing affordability
Winnipeg: The Frontier Centre for Public Policy today released its 6th Annual Demographia International Housing Affordability Survey. The survey measures housing in 272 metropolitan markets worldwide, and creates an affordability index based on the median price of housing as compared to median income (the Median Multiple).
Authors Wendell Cox and Hugh Pavletich note that housing affordability has been defined as around three years’ income for several generations. In 2009, Canada had a mixed year housing affordability-wise, with the country as a whole becoming slightly less affordable. The Median Multiple of Canadian mtroolitan markets (i.e. 14th out of the 28 housing markets measured) was 3.7 this year, up from 3.5 last year.
The survey takes the median multiple method of measuring housing affordability. This takes the median residential house sale value from the third quarter of 2009 and divides it by the median annual gross household income. For example in Vancouver the median sale value was $540,900 and the median household income was $58,200, giving a Median Multiple of 9.3—defined as “severely unaffordable”.
“The recent increases to almost ten years’ income are thus unprecedented in modern history,” write the study’s authors.
The affordability rating categories are as follows:
As with previous surveys this large sample of housing markets demonstrates a clear evidence that jurisdictions which adopt prescriptive planning policies, often called smart growth, have less affordable housing. This evidence is in line with a growing body of academic literature finding similar conclusions.
“Prescriptive land use regulation policies (principally compact development and urban consolidation) have virtually destroyed housing affordability in many markets,” write Cox and Pavletich. “Structural issues should receive urgent attention to restore housing affordability in more prescriptively regulated markets and to ensure its continuation in more responsive markets.”
The focus should be on:
(1) establishing sound and simple performance measures;
(2) appropriately financing infrastructure and;
(3) allowing sufficient inexpensive urban fringes on which to construct housing that is affordable. Authorities should closely monitor the Median Multiple and institute effective supplemental indicators.
Download a copy of 6th Annual Demographia International Housing Affordability Survey here:
For more information and to arrange an interview with the study's author, media (only) should contact:
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."