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January 24, 2011
Media Release: 7th Annual Demographia International Housing Affordability Survey
HOUSING AFFORDABILITY – HOW DOES YOUR CITY RATE?
Frontier Centre for Public Policy releases international survey of housing affordability. Survey compares affordability in 325 housing markets across seven countries –Including 35 in Canada.
The 2011 7th Annual Demographia International Housing Affordability Survey (data 3rd Qtr 2010) has been expanded to 325 urban markets of Australia (32 urban markets); Canada (35); Hong Kong, China (1); Ireland (5); New Zealand (8) United Kingdom (33) and the United States (211). This Annual Survey authored by experts Wendell Cox (U.S.A) and Hugh Pavletich (New Zealand)has been called the “gold standard” for assessing housing affordability of the urban markets it covers. Biographies of both authors are available in the appendix of the main report.
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”.
SURVEY INTRODUCTION – ACCLAIMED AUTHOR JOEL KOTKIN
Joel Kotkin, a California based writer on urban issues and executive editor of New Geography, contributed the Introduction “Why Affordability Matters” stating –
“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 (2010), American housing authority and author Dr Shlomo Angel (2009) and the former long term Governor of New Zealand’s Reserve Bank Dr Donald Brash (2008).
The 2011 survey includes data for 35 housing markets across Canada. These show that:
NOTABLE OBSERVATIONS FOR CANADA
AFFORDABLE HOUSING MARKET DEFINED
Hugh Pavletich of Performance Urban Planning, theinitiator and co-author of the Annual Demographia International Housing Affordability Surveys, provides a concise version of an affordable housing market within this year’s Survey –
“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.
For further information, media (only) should contact
Senior Policy Analyst, Frontier Centre for Public Policy
Tel +1 (306) 581-1007
St Louis, Illinois, USA
Tel +1.618.632.8507 United States
GLOSSARY AND TECHNICAL NOTES
direct the Centre’s Saskatchewan office from 2007 to 2011. He holds degrees in Electrical Engineering and Philosophy from the University of Auckland, where he also tutored Economics. In four years working for the Frontier Centre, David carried out extensive media work, presenting policy analysis through local and national television, newspapers, and radio. His policy columns have been published in newspapers in every province as well as the Globe and Mail and the National Post. David has produced policy research papers on telecommunications privatization, education, environmental policy, fiscal policy, poverty, and taxi deregulation. However, his major project with the Frontier Centre is the annual Local Government Performance Index (LGPI). The inaugural LGPI was released in November 2007 and comes at a time when municipal accounting standards in Canada must improve if the municipal government sector is to reach its potential as an economic growth engine for Canada. David is now a policy advisor in Wellington, New Zealand.