The Global Housing Affordability Crisis

Demographia International Housing Affordability looks at housing affordability in 94 major housing markets across Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom and the United States. The 2023 report covers the third quarter of 2022. Housing affordability by Demographia is given in the table below.

“Housing affordability in 2022 continued to reflect the huge price increases that occurred during the pandemic demand shock. Some housing affordability improvements have since occurred and more are likely as the demand shock is hopefully replaced by more normal market trends.”

 – (Demographia, 2023)

Hong Kong is the least affordable with a median multiple of 18.8 followed by Sidney, Vancouver, Honolulu, San Jose, Los Angeles, Auckland, Melbourne and Toronto. Pittsburgh, Rochester, Cleveland and St Louis were the most affordable markets.

The report is available here.

A new paper by Albert Saiz (The Global Housing Affordability Crisis: Policy Options and Strategies) looks at potential policy interventions in response to the surge in housing prices and rents that have grown faster than incomes in many parts of the world. It identifies 30 different strategies to deal with the housing affordability crisis.

  • Based on the findings, he argues that prior to determining and implementing programs, policymakers must understand the objective function and available policy tools. In general, the greater the tools deployed, better the outcomes;
  • Inter-partisan consensus is required at federal and local levels given that land use if allocated for housing would lock it over the next 20 years;
  • Given the affordability challenges, for developed and advanced developing countries, housing programs should be focused on the poor. Subsidies are argued to be unproductive due to their general equilibrium impacts which undo their partial equilibrium effects on affordability;
  • Local elasticity of housing supply should be an important contextual feature while determining policy response;
  • The design of the program should consider incentives, motivations and behavior of different agents such as beneficiaries, real estate agents, other consumers, suppliers etc.

To read more, click here.

Posted by at 2:48 PM

Labels: Global Housing Watch


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