Torontonians have long known that the city’s high real estate prices can be a huge barrier to jumping into the market, but according to a new report, Toronto is actually one of the top five most “severely unaffordable” cities in the entire world.
The Urban Reform Institute recently released its 2021 report on international housing affordability and found that Toronto ranked fifth on its list of the top “severely unaffordable” cities around the world. This is up one spot from last year’s ranking.
The report looks at middle-income housing affordability in 92 major metropolitan housing markets in eight areas, which include Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the United Kingdom, and the United States.
Canada’s other largest city, Vancouver, ranked even worse than Toronto, coming in as the second most unaffordable market in the world, holding its near top spot from last year.
Hong Kong rated as the most unaffordable, with Sydney, Australia and Auckland, New Zealand taking third and fourth place, respectively.
According to the report, the number of housing markets in both Canada and the United States that have become severely unaffordable has steadily increased since 2004.
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Just three years ago, in 2018, Toronto was ranked as the 21st most unaffordable market in Urban Reform Institute’s annual report, which shows a noticeable increase in the last few years alone.
In the early 2000s, the earliest version of the report rated up to 16 major markets in Canada and the United States as “affordable.” By 2019, that number dropped to 10, and over the past year, that number dropped even further, with only four markets rated “affordable,” all in the United States.
The report also details how the COVID-19 pandemic contributed to this year’s affordability rankings. Not only were many workers whose jobs could not be done remotely faced with either low or no wages, but a number of housing markets also saw escalating prices.
“This is in large measure a result of substituting telework for physical commuting, which gave households the flexibility to seek new housing with more space, indoors and outdoors,” the report reads. “This rapidly developing demand shock drove house prices up.”
The report also cites the International Monetary Fund’s World Economic Outlook, which found that “the pandemic will reverse the progress made since the 1990s in reducing global poverty and will increase inequality.”
Out of all the countries evaluated in the report, Canada had the smallest percentage of workers participating in telework but had the second-highest percentage of unemployed people.
The report anticipates that as remote working becomes more of the norm, it could reduce demand in major cities, which have historically been the least affordable areas.
“It provides the global middle class a ray of hope,” the Urban Reform Institute report says.