Hong Kong Remains the World’s Most Unaffordable City for Housing

Hong Kong Remains the World’s Most Unaffordable City for Housing
Properties as Lohas Park, Hong Kong on Aug. 20, 2022. (Bill Cox/The Epoch Times)
On March 21, the International Housing Affordability report released by Demographia, an international public policy consultancy, showed that Hong Kong topped the list of the world’s most unaffordable cities for housing for the 12th consecutive year, based on the median house price divided by the median household income. Hong Kong’s house price to income level was 18.8 in 2022.

However, the ratio of property prices to income fell from 23.2 in the previous year to 18.8, the sharpest improvement in the 19 years since the survey was conducted. According to the statistics, a family still needs 18.8 years’ income to buy a home.

Demographia pointed out that the property price to income ratio of 5.1 and above is “Severely Unaffordable,” the latest ranking of second to fifth are Sydney, Australia; Vancouver, Canada; Honolulu, and San Jose, where the index is 13.3, 12, 11.8 and 11.5.

On the other hand, the top three most affordable markets are Pittsburgh (3.1), Rochester (3.2), Cleveland, and St. Louis (3.5).

Due to the epidemic, rising interest rates, and the economic downturn, Hong Kong’s 2022 property prices declined by more than 15 percent. This ended the previous 13 consecutive years of a rising trend.

However, in January this year, the provisional figures of the residential property price index showed that property prices ended a seven-month decline and rebounded slightly by 0.6 percent month-on-month.

The survey compares housing affordability ratios in 94 major markets in eight countries, including Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom, and the United States, based on property prices and incomes as of the third quarter of 2022, with the median property price in a city divided by the median annual household income.

The U.S. housing market has become less affordable over time, with a median multiple of 3.6 in 2021, up from 2.3 in 1993.

A median multiple of three or fewer is considered affordable, while anything over five is severely unaffordable. Several metropolitan areas in the U.S. have median multiples over five.

The report also provides data on the UK housing market, which has experienced a similar decline in affordability. The median multiple in the UK was 5.1, up from 3.6 in 1993. London has the highest median multiple at 8.5, indicating severely unaffordable housing.

After Hong Kong, the UK has the second-least affordable housing market of the eight countries.

The report suggests that restrictive land-use policies and zoning regulations are major factors contributing to the decline in housing affordability in the U.S. and the UK.

It also notes that government policies promoting home ownership, such as “Help to Buy” in the UK, may have contributed to higher housing prices and made affordability more difficult.

The data and statistics presented in the report indicate that housing affordability has declined in both the U.S. and the UK over the past few decades.

The report suggests that reforming land-use policies and increasing the supply of affordable housing may be necessary to address these challenges.

Rita Huang is a Taiwan-based financial news journalist. She has contributed to The Epoch Times since 2014.
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