Most people dream of buying a house someday, but in some cities around the world it’s becoming more of a pipe dream. The ratio of median income to median home price is out of whack, and the only way for the average person to get a toehold in real estate is by winning the lottery or going into excessive debt. A 2015 survey of 378 cities in nine countries by Demographia has revealed the top ten major metropolitan markets around the world where buying a home is a big time budget buster. They say purchasing a house for 2.5 times your gross household income is reasonable. In one of these cities, the average dwelling costs 17 times the median household income! Granted, these are all beautiful, vibrant, sought-after urban centers with the jobs and lifestyle amenities people want. But they are becoming places where only the mega-wealthy or house-poor can live in. Here are the 10 most unaffordable cities where housing prices are insane.
10. Los Angeles, USA
Tinsel Town is a tempting place to live, with its warm weather, beachy lifestyle and big city offerings. However, you’d better have a movie star bank account if you want to buy a house here. With a median home price of $481,900 and a median household income of $60,000, LA’s Median Multiple (the median house price divided by gross annual median household income, a measurement used to assess housing affordability) is 8.0.
9. Auckland, New Zealand
Aukland is a casual yet cosmopolitan city with many recreational opportunities to boast about. However, it is becoming increasingly unaffordable for young families to buy a home here. With a median home price of $613,000 and a median household income of $75,100, Auckland’s Median Multiple is 8.2. With these kinds of home prices, its tough for first time buyers to even think of purchasing in this market.
8. San Diego, USA
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Another California city with out of whack housing prices is sunny San Diego, a gorgeous harbor-front town with sandy beaches, great restaurants and an outdoorsy lifestyle. With a median home price of $517,800 and a median household income of $62,700, San Diego’s Median Multiple is 8.3 – a big stretch for most people.
7. London, UK
The vibrant British capital is a dynamic place to call home, but you might not have much money left to enjoy the city’s amenities after pouring it all into a house. London has a median home price of $706,400 and a median household income of $84,222, making its Median Multiple 8.5. A lot of people who work in London make long commutes from far-flung suburban towns, a more affordable yet daunting daily grind.
6. Melbourne, Australia
Australia’s second biggest city has long had crazy housing prices, in part because of overseas investors driving property values up. Melbourne always ranks high in terms of livability, except when it comes to housing costs. With a median home price of $658,000 and a median household income of $75,900, Melbourne’s Median Multiple is 8.7. Ouch.
5. San Francisco, USA
Rental prices are bad enough (the most expensive metropolitan rental market in the US), but buying a home in San Francisco is virtually out of reach for all but the wealthy. With a median home price of $744,400 and a median household income of $81,200, San Francisco’s Median Multiple is 9.2. The City by the Bay’s economic inequality and unaffordable housing problem is further confounded by limits on new construction.
4. San Jose, USA
Number 4 on the list of cities where housing prices are insane is the forth California town in the top 10. San Jose, not far from the San Francisco Bay Area, is the hub of the high tech industry. Even with Silicon Valley salaries, the housing prices in this area are hard for all but the highest brackets to afford. The median home price is $860,000 and median household income is $93,400, making San Jose’s Median Multiple 9.2.
3. Sydney, Australia
Sydney is one of the most sought-after cities in the world, but a decades of real estate upsurges have made it prohibitive for regular families to get into the market. With a median home price of $812,000 and a median household income of $82,800, Sydney’s Median Multiple is 9.8. Is being a Sydneysider really worth that kind of a stretch? Obviously many people think so, as the real estate market continues to boom along.
2. Vancouver, Canada
This west coast Canadian jewel is the second most unaffordable city in the world when it comes to housing prices. Yet it offers such a tempting lifestyle, people will extend themselves to house-poor extremes to try to make it work. The market has been driven up by wealthy Asian investors who adore this Pacific Rim metropolis, for good reason. With a median home price of $704,800 and a median household income of $66,400, Vancouver’s Median Multiple is 10.6. First-time buyers and middle-income workers are pretty much squeezed out of this fabulous city.
1. Hong Kong, China
Hong Kong tops the list of cities where housing prices are insane. Uber-wealthy Chinese have been scooping up real estate at inflated prices for quite some time. With limited supply of land to build new projects, even a modest highrise apartment is priced in the stratosphere. From December 2008 to December 2012, housing prices jumped 117.2%. Some analysts see signs of market corrections, but Hong Kong will most likely continue to be an outrageous real estate market for quite some time. With a median home price of $4,892,000 and a median household income of $287,000, Hong Kong’s Median Multiple is a whopping 17.0. Crazy.
