New Demographia affordability study released

[Wybren]

http://www.demographia.com/dhi.pdf

Well Demographia have released their housing affordability study and while it may be surprising to some, but not to those of us here in the land of Oz, Australia is the least affordable place to live with the national median mutliplier (that is median house price divided by median wage) being 6.

under 3.0 is affordable 3.1-4.0 is moderately unaffordable 4.1-5.0 seriously unaffordable and 5.0 and up is severely unaffordable.

Canada and the USA have the most affordable housing, while Australia, UK, the Republic of Ireland and New Zealand had no areas with a multiplyer under 4.1.

The study is an interesting read, but I would be interested to see how other countrys faired in comparison.

[Wiglaf]

Severely unaffordable markets: foreign countries, California. Wonder why we are one of the top three states for the number of people moving away? Perhaps Australians could do the equivalent and all move to exurbs of Alice Springs or is that expensive as well. As for median home price / median income = 3 or less being affordable, how about $380,000/$42000. Are Australians politicians claiming that a drop from a 10.7:1 ratio to a 9.0:1 is too much and they need to push up housing prices like the dem-o-rats here do? Ain't guberment great?!!

[Ursa major]

I seem to live in the 19= most severely unafordable housing market.

The "market" quoted is rather large, though, with 5 million people spread across half of the southern part of England and has everything from rural idylls and sea-side resorts to inner-city sink estates within it; so while there will be those looking for a second home who will see it as a single market, most people would see dozens of quite distinct markets, a few cheap, most unaffordable, some ludicrously overpriced (and over-hyped).

The main problem here, where I live, is prices still driven by what remains of the City's bonus culture (and London salaries) matched against the comparatively low incomes of most people who live and work here.

[Wiglaf]

It's the old rule: If you don't spend it on the mortgage or rent, you'll spend it on gas. There is an affordable location here, an hour and a half from downtown.
Do they go by counties? Income of those that actually own homes? There math doesn't add up; it says here it is 5.9.

I looked it up; it includes metropolitan area except for London. I have to look it up here but apparently their number includes the desert on the otherside of a mountain range; I can think of no other number that would produce 5.9. Ok, median household income has gone up since I last saw it to $64-65K. West of me is $117K, east is $108K, south is only $85K, north is $148K, and here is $104K. Why do I feel poor all of a sudden? After all, I apparently live in freakin Bel Air.

[ktabic]

It's a 6.7 for my area , but apparently I have an above average salary.

I suspect that if they fine tuned it down to the shire level, that 6.7 would rapidly become a 12, since average house prices here seem to be about twice what is in the report.

[Wybren]

Originally Posted by Wiglaf

Severely unaffordable markets: foreign countries, California. Wonder why we are one of the top three states for the number of people moving away? Perhaps Australians could do the equivalent and all move to exurbs of Alice Springs or is that expensive as well. As for median home price / median income = 3 or less being affordable, how about $380,000/$42000. Are Australians politicians claiming that a drop from a 10.7:1 ratio to a 9.0:1 is too much and they need to push up housing prices like the dem-o-rats here do? Ain't guberment great?!!

Nah Alice would still probably be too expensive too.

What our problem here (aside from the bubble not busting yet as it has done else where) is previous governments did plan ahead and release land for housing development so there is a supply and demand problem in that we don't have enough for market demand, but because the houses are now so unaffordable, even for areas that should be affordable - like Woop Woop and the Back of Beyond- are way to expensive. In my housing complex there are about 10-15 villa's up for sale yet because of the price, they aren't shifting. People just cant afford to buy without selling body parts on the black market. Our government have had incentives in place for a while to try to encourage people to buy or build but it isn't enough. The current thing is a $14000 grant for first home buyers and a $21000 grant for first home builders but that wouldn't even cover the 10% deposit required.

I just wish my inlaws would read this study, then maybe they'd get off our back to buy a house we cant afford to pay off.

[Wiglaf]

Originally Posted by Wybren

Nah Alice would still probably be too expensive too.

What our problem here (aside from the bubble not busting yet as it has done else where) is previous governments did plan ahead and release land for housing development so there is a supply and demand problem in that we don't have enough for market demand, but because the houses are now so unaffordable, even for areas that should be affordable - like Woop Woop and the Back of Beyond- are way to expensive. In my housing complex there are about 10-15 villa's up for sale yet because of the price, they aren't shifting. People just cant afford to buy without selling body parts on the black market. Our government have had incentives in place for a while to try to encourage people to buy or build but it isn't enough. The current thing is a $14000 grant for first home buyers and a $21000 grant for first home builders but that wouldn't even cover the 10% deposit required.

I just wish my inlaws would read this study, then maybe they'd get off our back to buy a house we cant afford to pay off.

That's scary. Here they limited what could be built each year, pushed single family homes, and zoned for low or medium density. When our shortage caused demand to skyrocket, they pushed companies to give people easy credit. The tax code which always penalized renters and favored owners was changed to benefit house "flippers". Now it has all crashed dooming the economy. Still homes are highly unaffordable and while house prices fell rents have kept rising. The proposed solution: raise house prices.
You seem to be on the same road; you're just a few miles behind us is all.