A new report indicates that buying a house is increasingly difficult in many countries around the world, particularly in the United States. However, the most challenging city to buy a house is not in the US, despite several American cities ranking among the top ten most expensive housing markets globally.
For the past 20 years, the “International Housing Affordability” annual report, which has been tracking housing prices, revealed that cities on the West Coast of the US and in Hawaii account for half of the top ten most challenging cities to buy property globally, with a total of five cities.
Not surprisingly, most of these unaffordable cities in the US are located in California, with San Jose, Los Angeles, San Francisco, and San Diego all ranking in the top ten. Honolulu in Hawaii ranked sixth in the list. The annual report surveyed 94 major real estate markets in 8 countries.
The new report compared average income to average housing prices and identified three main reasons for the recent surge in housing prices: the COVID-19 pandemic driving demand for homes with outdoor spaces, land-use policies aimed at restricting unplanned urban sprawl, and an influx of investors entering the market.
Aside from the US, Australia also dominates the rankings, with cities like Sydney, Melbourne, and Adelaide in the south making it to the top. However, Hong Kong claimed the top spot on the global ranking, known for its cramped apartments and exorbitant rents. It is worth noting that Hong Kong is the only market in China and even Asia covered in the report.
As a regular on the “most expensive” list, Hong Kong has the lowest homeownership rate among all surveyed cities, at only 51%. While Hong Kong may be the least affordable city in terms of housing prices globally, buying a house in the city is not as financially burdensome as before.
During the 2020 pandemic, the Hong Kong government closed its borders and implemented a “zero-COVID” policy, leading to many people leaving the city. Additionally, the new National Security Law had a chilling effect on the city, prompting more residents to depart, causing a decline in housing prices.
For those eagerly awaiting policy changes or declining demand, the report also identified the most affordable cities to buy a house among the 94 cities surveyed globally. They include Pittsburgh, Rochester, and St. Louis in the US; Edmonton and Calgary in Canada; Blackpool, Lancashire, and Glasgow in the UK; as well as Perth and Brisbane in Australia.
The report was authored by researchers from the Population Dynamics and Policy Center at Chapman University in California and the independent public policy think tank Public Policy Frontier Center in Canada.