Canada is at the top of the list in a new study comparing housing affordability in six countries.
The Demographia International Housing Affordability Survey: 2008 (external - login to view), released by Wendell Cox Consultancy, compared conditions in the larger cities of Australia, Canada, Ireland, New Zealand, the United Kingdom, and the United States.
To determine affordability, researchers used the median multiple technique -- which calculates the median house price as a multiple of the median household income.
In effect, the figure is the amount of years it would take a person with a median household income to purchase a median-priced house (if they were able to devote all of their income to repayments while avoiding the additional cost of interest).
For example, Halifax's median household income is $60,000 and the median house price is $188,200 -- making the city's median multiple 3.1 ($188,200 divided by $60,000, then rounded to one decimal place).
Canada's national median multiple is 3.1, compared to:
According to the survey, anything 3.0 or lower is 'affordable' and anything 5.1 and higher is 'severely unaffordable.'
- Australia 6.3
- New Zealand 6.3
- United Kingdom 5.5
- Ireland 4.7
- United States 3.6
All of the 59 affordable markets on the survey, which have a median multiple of 3.0 or below, were in Canada and the U.S.
The most affordable market on the survey was Thunder Bay, which had a median multiple of 1.8.
Canada's least affordable markets were all in British Columbia.
Kelowna, with a median multiple of 8.5, took the 13th spot on the list of the top 50 least affordable housing markets. The least affordable market overall was Los Angeles (11.5).
Vancouver (8.4) ranked 15th on the list and Victoria (7.3) ranked 22nd.
In total, there are 13 'affordable' markets in Canada, eight 'moderately unaffordable,' three 'seriously unaffordable,' and four 'severely unaffordable.'
The survey also cites examples of the benefits of relocating to cheaper markets.
For example, a household moving from Vancouver to Winnipeg would save nearly $1,000,000 in purchase and mortgage costs for a median-priced house. The savings are equivalent to 16 years median household income at Vancouver income levels or 17 years at Winnipeg rates.