Edmonton is Canada’s most affordable city, but it’s not all good news
We all know that Edmonton is one of Canada’s most affordable cities, but a recent American study has shed light on how the city compares on the global stage.
The study, from California-based Chapman University, uses a median price-to-income ratio, or the median multiple, to determine the level of unaffordability in respective markets. The study has several different grades of unaffordability based on the median multiple:
- Affordable (3.0 and under)
- Moderately unaffordable (3.1 to 4.0)
- Seriously unaffordable (4.1 to 5.0)
- Severely unaffordable (5.1 to 8.9)
- Impossibly unaffordable (9.o and above)
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Edmonton had a median multiple of 3.7, meaning that the median house price was almost four times more than the median income of someone working in the city. While that puts the city firmly in “moderately unaffordable” territory, it’s the most affordable in Canada, and the fifth most affordable globally.
“High prices are largely the product of policies that seek to limit growth on the periphery, which has been the usual way that cities have grown. The Demographia report has shown that where such policies predominate, for example, in the United Kingdom, California, Washington, Oregon, Colorado, New Zealand, Australia and much of Canada, the results are disastrous, at least for potential homebuyers,” the study notes.
For our neighbours to the south, housing is nearly five times the median income.
“Calgary, with a median multiple of 4.8, was seriously unaffordable. Both Edmonton and Calgary could see improved economic growth as a result of increasing fossil fuel demand and increased pipeline capacity. ”
Chapman points to prices surging in the 1990s, especially in “markets governed by urban containment strategies.” The study says that since the mid-2000s, there’s been a considerable loss of housing affordability in Canada, with Vancouver and Toronto being hit the hardest.
Chapman’s study suggests New Zealand might have the key to fixing the housing crisis in major global markets.
“Counterurbanization is one cause for some optimism on housing affordability. New Zealand’s recently enacted housing reforms are another,” it says.
“The New Zealand government has adopted a program that should lead to much lower suburban and exurban land prices, leading to materially improved housing affordability. Similar models should be implemented in housing markets around the world.
These reforms should be a template for policies that, along with migration patterns, could augur in a period of price stability.”
The study offers a warning: people are voting with their feet. With tens of thousands moving to Edmonton in recent years in search of a lower cost of living, we’ve seen it firsthand.
“Until fundamental reforms are made in the most expensive markets, households seeking a better quality of life are likely to continue moving elsewhere. The largest and most expensive markets are likely to continue shedding residents to more affordable areas,
making them considerably less dominant in the future.”
With files from Amir Ali