Finding an affordable home is becoming increasingly difficult worldwide. A new report highlights the cities where this struggle is most severe, including the top five least affordable metropolitan areas in the United States. The annual Demographic International Housing Affordability report, which has tracked housing costs for two decades, lists the top 10 most expensive housing markets globally and the most affordable ones.
How the Rankings Work
The rankings are based on data from the third quarter of 2023, covering 94 major markets in eight countries: Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom, and the United States. The report uses a “median multiple” to measure affordability, which is the median house price divided by the median household income.
The markets are categorized into five affordability brackets:
- 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 (9.0 and over)
The Top 10 Most Expensive Cities
Hong Kong is the least affordable city in the world. Here are the top 10 most expensive cities to live in:
- Hong Kong (16.7)
- Sydney, Australia (13.3)
- Vancouver, Canada (12.3)
- San Jose, California (11.9)
- Los Angeles, California (10.9)
- Honolulu, Hawaii (10.5)
- Melbourne, Australia (9.8)
- San Francisco, California (9.7) (tie)
- Adelaide, Australia (9.7) (tie)
- San Diego, California (9.5)
(Bonus) Toronto, Canada (9.3)
Why Are These Cities So Expensive?
The report points to several reasons for the high cost of housing:
- Increased Demand from Remote Work: The rise of remote work during the pandemic led to a higher demand for housing, especially in suburban and remote areas. People wanted more space, both inside their homes and in their gardens, driving up prices.
- Urban Containment Policies: These policies aim to limit urban sprawl and increase density in desirable areas. While well-intentioned, they restrict the available land for new housing. In already crowded markets, this drives land values and house prices much higher.
The struggle for affordable housing is not confined to a few big cities; it is a global issue affecting various countries. This report underscores the need for policy changes to address the underlying causes of the affordability crisis.
