These Are The Cities With The Least Affordable Housing In The World. London And New York, You’re Not Even Close.
The gap between house prices and global income hit $740B in 2018, as housing became less affordable for residents of most of the world’s big cities, according to new research by Knight Frank.
Rapid urbanisation, the transformation of housing into a financial asset, politics and lack of supply of land all had an impact in making the price of housing grow faster than incomes, the brokerage said.
Knight Frank also created a global housing affordability monitor, ranking 32 cities in terms of housing affordability, using three metrics: house price to income ratio, rent as a proportion of income and real house price growth compared to real income growth.
The cities with the least affordable housing in 2018 were Amsterdam, Auckland, Hong Kong, Los Angeles, San Francisco, Sydney, Toronto and Vancouver. Famously expensive markets London, New York and Dublin were in a second cluster of seven cities.
Across the 32 cities, house prices grew on average 16% faster than incomes in the past five years, Knight Frank said.
Some cities bucked the growing disparity trend. New York saw its income growth exceed real house price growth by 3%. Moscow, Singapore, Mumbai and Paris also saw average real incomes over the last five years grow faster than real house prices. Moscow had the largest difference — real income growth outpaced real house price growth by 22%.
But in other cities things are getting much worse. Amsterdam, Vancouver and Auckland saw real house price growth outstrip real income growth by 59%, 46% and 32%, respectively, making these cities some of the least affordable in the world.
Knight Frank outlined how the real estate industry and governments are trying to combat these trends.
“The growing pressure on housing affordability is changing the development landscape,” Knight Frank Global Head of Research Liam Bailey said. “It is influencing the types of product on offer, the locations developers are focusing on and even the organisations becoming involved in the development process.”
Among the solutions it outlined were co-living, micro housing, public-private partnerships, companies like Facebook building housing for workers, better public transport and government cooling measures.