Lat­est Demographia Hous­ing Afford­abil­ity Sur­vey Avail­able

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The 7th ANNUAL DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY SURVEY (data 3rd Qtr 2010) has just been pub­lished and is down­load­able from this link

I repro­duce below Demographia’s press release, which lays the blame for hous­ing unaf­ford­abil­ity on land use reg­u­la­tions. As reg­u­lar read­ers of this site know, I see finance as the core prob­lem in house price bub­bles rather than land use reg­u­la­tions, but every Ponzi Scheme needs a plau­si­ble story, and land use reg­u­la­tions pro­vides one (which has been used to great effect in Aus­tralia) while the absence of reg­u­la­tions takes the wind out of a Ponzi yarn.

Jan­u­ary 24, 2011






The 2011 7th Annual Demographia Inter­na­tional Hous­ing Afford­abil­ity Sur­vey (data 3rd Qtr 2010) has been expanded to 325 urban mar­kets of Aus­tralia (32 urban mar­kets); Canada (35); Hong Kong, China (1); Ire­land (5); New Zealand (8) United King­dom (33) and the United States (211).

This Annual Sur­vey has been called the “gold stan­dard” for assess­ing hous­ing afford­abil­ity of the urban mar­kets it cov­ers – and will be expanded to other mar­kets  going for­ward, as more robust data on house prices and house­hold incomes become avail­able.


For hous­ing mar­kets to rate as “afford­able”, hous­ing should not exceed three times gross annual house­hold income (the Median Mul­ti­ple). If this “afford­abil­ity thresh­old” is breached, it indi­cates local polit­i­cal imped­i­ments to the pro­vi­sion of afford­able hous­ing that need to be dealt with.

Hous­ing mar­kets are rated as “afford­able” at or below 3 times gross annual house­hold income (Median Mul­ti­ple), “mod­er­ately unaf­ford­able” at or below 4 times income, “seri­ously unaf­ford­able” at or below 5 times income and above 5, rated “severely unaf­ford­able”.


Hong Kong has the most unaf­ford­able hous­ing of the 325 urban mar­kets sur­veyed, with hous­ing at 11.4 times house­hold income, fol­lowed by Syd­ney, Aus­tralia at 9.6 and Van­cou­ver, Canada at 9.5

Of the coun­tries sur­veyed, Aus­tralia (32 urban mar­kets) has the most intense hous­ing stress with hous­ing prices at 6.1 times house­hold incomes, fol­lowed by New Zealand (8) at 5.3 times, United King­dom (33) at 5.2, Ire­land (5) at 4.0, Canada (35) 3.4 and the United States (211) with over­all the most afford­able hous­ing at 3.0 times gross annual house­hold incomes.

There are 115 afford­able hous­ing mar­kets (all in the United States and Canada), 94 mod­er­ately unaf­ford­able mar­kets, 42 seri­ously unaf­ford­able mar­kets and 74 severely unaf­ford­able mar­kets.

27 of the 32 Aus­tralian hous­ing mar­kets are severely unaf­ford­able, with the remain­ing 5 seri­ously unaf­ford­able.


For the first time, the Annual Demographia Inter­na­tional Hous­ing Afford­abil­ity Sur­vey addi­tion­ally sep­a­rates the 82 major urban mar­kets with pop­u­la­tions exceed­ing one mil­lion. There are 20 afford­able major urban mar­kets, with 25 mod­er­ately unaf­ford­able, 13 seri­ously unaf­ford­able and 24 severely unaf­ford­able mar­kets.

The fast grow­ing Atlanta, Geor­gia, USA is the most afford­able of the 82 major met­ros, with hous­ing prices at 2.3 times house­hold income. Being an “open mar­ket”, Atlanta over pro­duced mar­ket priced hous­ing, but did not bub­ble. “Scarcity” trig­gers hous­ing bub­bles — finance is sim­ply the “fuel”.


Joel Kotkin, a Cal­i­for­nia based writer on urban issues and exec­u­tive edi­tor of New Geog­ra­phy, con­tributed the Intro­duc­tion “Why Afford­abil­ity Mat­ters” stat­ing –

Lit­tle dis­cussed have been the social and eco­nomic impli­ca­tions of such poli­cies (stran­gling urban expan­sion). Although usu­ally thought of as “pro­gres­sive” in the Eng­lish speak­ing world, the addic­tion to “smart growth” can more read­ily be seen as socially “regres­sive”. In con­trast to the tra­di­tional poli­cies of the left of cen­ter gov­ern­ments that pro­moted the expan­sion of own­er­ship and access to the sub­ur­ban “dream” for the mid­dle class, today regres­sive “pro­gres­sives” actu­ally advo­cate the clos­ing off of such options for poten­tial home­own­ers.”

……..It is a very dan­ger­ous con­cept, essen­tially pro­mot­ing a form of neo feu­dal­ism which reverses the great social achieve­ment of dis­pers­ing prop­erty own­er­ship.”

…..But per­haps most remark­able has been the shift in Aus­tralia, once the exem­plar of mod­er­ately priced, high qual­ity mid­dle class hous­ing, to now the most unaf­ford­able hous­ing mar­ket in the Eng­lish speak­ing world.”

The Intro­duc­tions to ear­lier Sur­veys had been pro­vided by Aus­tralian envi­ron­men­tal sci­en­tist Dr Tony Rec­sei (2010), Amer­i­can hous­ing author­ity and author Dr Shlomo Angel (2009) and the for­mer long term Gov­er­nor of New Zealand’s Reserve Bank Dr Don­ald Brash (2008).


Hugh Pavletich of Per­for­mance Urban Plan­ning, the ini­tia­tor and co author of the Annual Demographia Inter­na­tional Hous­ing Afford­abil­ity Survey’s , pro­vides a con­cise ver­sion of an afford­able hous­ing mar­ket within this year’s Sur­vey –

For met­ro­pol­i­tan areas to rate as “afford­able” and ensure that hous­ing bub­bles are not trig­gered, hous­ing prices should not exceed 3.0 times gross annual house­hold earn­ings. To allow this to occur, new starter hous­ing of an accept­able qual­ity to the pur­chasers, with asso­ci­ated com­mer­cial and indus­trial devel­op­ment, must be allowed to be pro­vided on the urban fringes at 2.5 times the gross annual median house­hold income of that urban mar­ket (refer Demographia Sur­vey Sched­ules for guid­ance).”

The crit­i­cally impor­tant Devel­op­ment Ratios for this new fringe starter hous­ing should be 17 – 23% ser­viced lot – the bal­ance the actual hous­ing con­struc­tion.”

The fringe is the only sup­ply / infla­tion vent of an urban mar­ket.”

There is a tru­ism, well under­stood by respon­si­ble devel­op­ers and real estate financiers inter­na­tion­ally -

If you get the land price wrong – every­thing else is wrong.”

Due to unnec­es­sary polit­i­cally inflated land costs, hous­ing mar­kets are “very wrong” in Hong Kong, Aus­tralia, New Zealand, the United King­dom, Ire­land and some parts of Canada and the United States.


Soon after World War 11, dur­ing the era of Demo­c­rat Pres­i­dent Harry S. Tru­man and the ear­lier enact­ment of the G I Bill,  the great Amer­i­can con­struc­tion indus­try entre­pre­neur William  (Bill) Levitt , “the father of sub­ur­bia”  ( 1950 Time mag­a­zine “Man of the Year” refer HOUSING: Up from the Potato Fields — TIME) trans­formed the cos­seted and anti­quated “horse and buggy” con­struc­tion indus­try to the mod­ern, dis­ci­plined and com­pet­i­tive pro­duc­tion one we know today.

As the hor­rific World War 11 drew to a close, polit­i­cal author­i­ties inter­na­tion­ally were acutely aware of the polit­i­cal costs fol­low­ing the con­clu­sion of World War 1, when social con­di­tions were neglected. This led to social dis­rup­tion in the United States, the spawn­ing of fas­cism in Ger­many and this is turn led to World War 11. In the United States, the polit­i­cal author­i­ties ensured the polit­i­cal and com­mer­cial bar­ri­ers to the pro­vi­sion of afford­able hous­ing were effec­tively dealt with. In 1944 hous­ing starts were just 114,000. By 1950 they were 1.7 mil­lion (refer The GI Bill of Rights — Chang­ing the social, eco­nomic land­scape of the United States).

The dis­ci­plined and con­sumer focused Levitt meth­ods of con­struc­tion spread quickly through­out the United States and other coun­tries, includ­ing France (refer France: A Les­son from Levitt — TIME). The 1965 Time mag­a­zine arti­cle states –

Post­war pros­per­ity has enabled West­ern Europe to catch up with the US stan­dard of liv­ing in such basic human needs as food and cloth­ing. When it comes to hous­ing, though, most of the Con­ti­nent still lags decades behind.”

New Euro­pean hous­ing often looks ele­gant from the out­side, but much of it is back­wards in kitchen equip­ment, bath­room lay­out, floor plans, heat­ing, plumb­ing and light­ing – the innards that make the shell truly liv­able.”

Thus it is not sur­pris­ing that the French have enthu­si­as­ti­cally greeted an inva­sion by Long Island’s William J Levitt, the US’s biggest home­builder. More than 60,000 French­men have poured out of Paris to gape at Levitt’s recently opened Amer­i­can style sub­di­vi­sion in sub­ur­ban Le Mes­nil-Saint – Denis…”

So des­per­ate is France’s need for more hous­ing that even Levitt’s French com­peti­tors cheer his ven­ture – the first such in Europe by a US builder. ‘He’s help­ing to fill the need,’ says Builder Jacques Boulais  ‘and he’s giv­ing French con­trac­tors a good les­son in the mod­ern way to build a house’.”

In large part – restor­ing hous­ing afford­abil­ity requires relearn­ing his­tory. And learn­ing from the grow­ing afford­able hous­ing mar­kets iden­ti­fied within the Annual Demographia Inter­na­tional Hous­ing Afford­abil­ity Sur­vey. Par­tic­u­larly Texas – with its open land mar­kets, appro­pri­ate financ­ing of infra­struc­ture with the bond financed  Munic­i­pal Util­ity Dis­trict model and sen­si­ble Mort­gage Con­sumer Pro­tec­tion Law.

Check out what they pay for hous­ing in Hous­ton (refer Hous­ton Asso­ci­a­tion of Real­tors with its lat­est Monthly Report) — and ask – “why aren’t I pay­ing the same price in my own city?”.

For fur­ther infor­ma­tion, com­mu­ni­cate with the Sur­vey co authors –

Wen­dell Cox
St Louis, Illi­nois, USA
Tel +1.618.632.8507 United States

Hugh Pavletich
Per­for­mance Urban Plan­ning
Tel +64 3 343 9944 New Zealand

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • Thanks Arch,

    It’s amaz­ing to me to watch the same thing–the capac­ity for the 100th per­son in a line to believe that what’s hap­pened to the 99 before him won’t occur to him.

    The ABS house price index is released tomor­row; it will be inter­est­ing to (a) see what it is [I’m expect­ing some­thing in the range of 1–2% fall] and (b) how the prop­erty spruik­ers react if that hap­pens.

    The key fac­tor for me is the impact of the Credit Impulse, which as I’ve doc­u­mented on this site is one of the key rea­sons Aus­tralia didn’t fall down in 2009-10; but it is now start­ing to turn on a monthly/quarterly basis (as I’ll report in a blog post tomor­row). This is the key dri­ver of house prices, so I think the delay engi­neered by the Government’s “First Home Ven­dors Boost” is finally com­ing to an end.

  • bret­t123

    I’m not so sure it’s all just naivete. There have been a few polls around lately that show most Aus­tralians are con­cerned about the hous­ing mar­ket. And I don’t think house prices are the num­ber 1 topic at din­ner par­ties any­more.

    Per­son­ally though, I think the major blame for this so called naivete lies with those who are try­ing to pre­dict the crash. There’s any num­ber of web­site around at the moment that are pre­dict­ing house price crashes. The weird thing some of them have been around for 5 years or more and they tend to have been say­ing the same thing for the last 5 years “next year I pre­dict a hous­ing crash”. And then 2 years ago we even sur­vived the GFC — with hardly a scratch! This has played no small part in lulling most Aus­tralians into a false sense of secu­rity.

    It’s good that there are peo­ple out there warn­ing of the dan­gers. It would be nice though if their pre­dic­tions were some­where in the ball­park. Steve at least has the balls to say he got it wrong..not many other sites do.

  • Arch­Stan­ton

    Yes, it’s always been a source of frus­tra­tion for me that peo­ple have failed to make the con­nec­tion between credit expan­sion plus other stim­u­lous mea­sures and the increase in house/asset prices. With the aver­age Aus­tralian already pretty finan­cially stretched, where is the incre­men­tal bor­row­ing going to come from in order to keep the bub­ble inflat­ing? Per­haps a sharp increase in immi­grants is the (short-term) answer — not that I’d accuse any gov­ern­ment of tak­ing a short-term view, of course…

  • Arch­Stan­ton

    Yes, I’m always wary when peo­ple pre­dict something’s going to hap­pen within a tight time­line — they’re almost always wrong. As the old say­ing goes: “mar­kets can remain irra­tional longer than you can remain sol­vent.” Ask John Paul­son, who ben­e­fit­ted spec­tac­u­larly from the sub-prime melt­down — he was lucky that the edi­fice cracked when it did as his “short posi­tions” which he started to put on as early as the mid­dle of 2006 were start­ing to cost him an arm and a leg and his investors could eas­ily have lost con­fi­dence and pulled the plug on him.
    As I say, I won’t pre­dict a hous­ing crash, but all the ducks are per­fectly lined up for one. China only has to slow down sharply or their own hous­ing mar­ket to melt down and the domino effect could wash straight through the econ­omy here.
    The Bris­bane hous­ing mar­ket was already show­ing signs of stress long before the floods (and it has much higher afford­abil­ity than either Syd­ney or Mel­bourne), so it would pay to be cau­tious for a while.

  • infla­tion fig­ures have come in softer than expected, remain­ing below the key 3 per cent mark. The result gives the Reserve Bank even more rea­son to keep inter­est rates on hold for at least another month, and likely even longer.
    url=“”]Ebooks Uk[/url]

  • Blam­ing reg­u­la­tions is a non-issue, much like the rapid house prices increases that have occurred since 1996–1997 is sup­pos­edly due to pop­u­la­tion growth and demo­graphic change – some­thing which is not sup­ported by the evi­dence.
    Ebooks Uk

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