Vancouver second least affordable in world

BY MARIO TONEGUZZI, CALGARY HERALD JANUARY 23, 2012

Calgary’s housing market was rated as one of the most affordable in Canada by an international survey.

CALGARY — Calgary’s housing market was rated as ‘moderately unaffordable’ by an international survey released Monday which also shows Vancouver as the second least affordable in the world.

The Eighth Annual Demographia International Housing Affordability Survey, which covers 325 global metropolitan markets, uses its median multiple formula to rank affordability around the world. The median house price is divided by gross (before tax) annual median household income to rate housing affordability. The survey is as of the third quarter of 2011.

Calgary’s median multiple was 3.9 ranking it 206 out of the 325 markets which covered Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom and the United States.

Vancouver was rated 324 with a median multiple of 10.6 behind Hong Kong’s 12.6.

In Canada, the following markets and their median multiples were least affordable than Calgary: Abbotsford, 7.0; Victoria, 6.8; Kelowna, 6.6; Toronto, 5.5; Montreal, 5.1; Hamilton, 4.2; Sherbrooke, 4.0; and Saskatoon, 4.0.

“Housing affordability in Calgary has been favourable compared to other regions in Canada,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “Economic activity in Calgary has been supporting employment and earnings growth. Above-average income levels coupled with modest growth in home prices and low mortgage rates continue to provide prospective buyers in Calgary opportunities to purchase a home.”

Robert Hogue, senior economist with RBC Economics, said Calgary shows up very well in the bank’s affordability measures compared with other large housing markets in Canada.

“We consider Calgary as one of the most affordable ones in the past year, past year and a half or so,” he said. “Housing prices have been quite sluggish since the start of the housing downturn in Calgary which preceeded a little bit the recession. Actually preceeded a little bit the fall in prices in other parts of the country during the recession.

“The pick up has been quite weak and up until very recently in Calgary. So the decline in prices in 2007, 2008, around that time relative to continued income growth in Alberta has helped improve affordability.”

In a report last November, RBC said a slight deterioration in affordability took place in the third quarter of the year in Calgary compared with the second quarter. Despite that, “affordability remains quite attractive in Calgary, ranking at some of the better levels among Canada’s largest cities.”

The Demographia international survey said markets with median multiples of 3.0 and under are described as affordable. Those 3.1 to 4.0 are moderately unaffordable. Those from 4.1 to 5.0 are seriously unaffordable. And those from 5.1 and over are severely unaffordable.

Calgary’s median house price was $353,700 with a median household income of $91,400. It was ranked 26th in Canada in terms of affordability.

As a comparison, Vancouver’s median house price was $678,500 with a median household income of $63,800.

The median house price in Hong Kong was $3.148 million with a median household income of $249,000.

The most affordable Canadian market was Windsor at 16th in the world with a median multiple of 2.2, a median house price of $149,900 and a median household income of $67,900.

The most affordable market in the world was Saginaw, Michigan, with a median multiple of 1.3, a median house price of $56,200 and a median household income of $42,400.

mtoneguzzi@calgaryherald.com

Canadian housing affordability rankings in 325 international markets:

(Ranking, city, median multiple, median house price, median household income)

324. Vancouver; 10.6; $678,500; $63,800

313. Abbotsford; 7.0; $443,700; $63,000

309. Victoria; 6.8; $417,300; $61,600

303. Kelowna; 6.6; $385,100; $58,100

276. Toronto; 5.5; $406,400; $73,600

255. Montreal; 5.1; $281,700; $54,700

221. Hamilton; 4.2; $292,700; $69,000

208. Sherbrooke; 4.0; $192,200; $48,200

208. Saskatoon; 4.0; $274,700; $68,300

206. Calgary; 3.9; $353,700; $91,400

Note: Median multiple is median house price divided by gross annual median household income.