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Everyone who lives in Vancouver knows how expensive the housing market is, but a recent American study has shed light on how “impossibly unaffordable” the city is on the global stage.
“Vancouver is the least affordable market in Canada and the 92nd least affordable of the 95 markets, with an impossibly unaffordable median multiple of 11.8, making it more unaffordable than all markets except Hong Kong, Sydney, and San Jose,” the study found.
That makes Vancouver the fourth-most “impossibly unaffordable” housing market in the world. The dubious honour comes from the California-based Chapman University, in a study that analyzed international housing affordability.
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“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.
Chapman’s study 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)
Vancouver had a median multiple of 11.8, meaning that the median house price was almost 12 times more than the median income of someone working in the city.
One thing the study reflects on is reports that offer national averages. Chapman’s analysis points out that those reports can often be misleading due to the significant variability between markets in the same country. That is very true for Canada, and Chapman’s study provides an example, pointing out that Vancouver is 3.2 times more expensive than Edmonton.
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.”
We’ve published many stories about folks leaving B.C. for other provinces for cheaper living, like Alberta. The study offers a warning in that regard, saying people are voting with their feet.
“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.”