These cities are now so expensive that they are considered “impossibly unaffordable” – WSVN 7News

(CNN) — Anyone who has paid any attention to the housing market over the past two decades knows that in many countries, especially the United States, purchasing a home has become much more difficult.

But a new report sums up the feelings of many potential homebuyers, creating a category in which some major cities are labeled “impossibly inaccessible.”

The report compared average incomes with average home prices. It found that pandemic-driven demand for homes with outdoor space, land-use policies aimed at curbing urban sprawl and an influx of investors into markets had sent prices soaring.

According to the annual Demographic International Housing Affordability Report, which has been monitoring home prices for 20 years, American cities on the West Coast and Hawaii rank in five of the 10 most unaffordable places.

Perhaps unsurprisingly, the most expensive U.S. cities in which to buy a home are in California, with San Jose, Los Angeles, San Francisco and San Diego making the top ten.

Hawaii’s capital Honolulu also ranks sixth out of 94 major markets surveyed in eight countries.

Australia is the only country outside the United States to dominate the “impossibly unaffordable” list, led by Sydney and the southern cities of Melbourne in Victoria and Adelaide in South Australia.

But at the top of the global leaderboard is Hong Kong, a compact Asian financial center known for small apartments and sky-high rents. It is worth noting that this is the only Chinese market covered by the report.

Regularly featured in rankings of the “most expensive” cities, Hong Kong has the lowest home ownership rate of all cities in the study, at just 51%, compared to Asian rival Singapore, where home ownership rates exceed 89% thanks to the government’s long-standing commitment to public housing .

Hong Kong may be the least affordable city in the world, but potential home buyers may be convinced by the fact that it is no longer as affordable as it once was.

House prices fell during the 2020 pandemic as the government closed the city’s borders and imposed a “zero Covid” policy – on top of new national security laws that had a chilling effect on the city.

Why so high?
The report measures affordability using the price-to-income ratio, which is the average home price divided by the average gross household income.

He links an increase in home working during the pandemic to a “demand shock” for homes outside city centers that have more outdoor space. But he also blames rising house prices on land-use policies, including “urban isolation,” a type of planning aimed at stopping urban sprawl.

“The middle class is under siege mainly due to escalating land costs. As land was rationed to curb urban sprawl, the excess of demand over supply drove up prices,” the report said.

Prices rose even further as investors jumped into the market to make a profit.

One solution, as the report’s author wrote, is to look to New Zealand.

In an opinion piece for Canada’s Financial Post, Wendell Cox, a senior fellow at the Frontier Center for Public Policy, recommended that Canada in particular should follow New Zealand’s lead and free up more land for immediate development.

Both Vancouver and Toronto were placed on the “impossibly off-limits” list.

Cox points to the “Going for Housing Growth” policy introduced by New Zealand’s coalition government, which requires local authorities to immediately zone for 30 years of housing development.

“Toronto and Vancouver show that the cost of taming expansion is unacceptably high: inflated home prices, higher rents and, for a growing number of people, poverty,” Cox wrote.

For those looking forward to a change in policy or a decline in demand, the report also highlights the cheapest cities among the 94 surveyed around the world.

These are Pittsburgh, Rochester and St Louis in the USA; Edmonton and Calgary in Canada; Blackpool, Lancashire and Glasgow in the UK; and Perth and Brisbane in Australia.

The report was prepared by researchers from the Center for Demography and Politics at Chapman University in California and the Frontier Center for Public Policy, an independent think tank on public policy in Canada.

10 “impossibly inaccessible” cities.
Hong Kong
Sydney
Vancouver
San José
Los Angeles
Honolulu
Melbourne
San Francisco/Adelaide
San Diego
Toronto