The median home price in the Asian financial capital is now a record-high 20.9 times the median annual income – up from a multiple of 19.4 times last year, and the highest multiple ever recorded in the market study.
The survey, which is in its 15th year, covers 309 metropolitan housing markets in eight countries, including Australia, Canada, China, Ireland, New Zealand, Singapore, the UK and the US, comparing them for what it terms their “median multiples,” which is the median house price divided by the median income.
The Demographia International Housing Affordability Survey: 2019 defines a median multiple of 5.1 or above as severely unaffordable, and does not attempt to compare costs per square foot, household sizes or other demographic factors. Within China, the only city that was covered was Hong Kong.
The authors, who noted that home prices in Hong Kong had declined since this year’s research was conducted in the third quarter of 108, stated that even if they declined as much as 24% in 2019, “Hong Kong’s housing would continue to be severely unaffordable by a large margin.”
The study noted that Hong Kong’s housing affordability had worsened markedly over the last two decades. Figures from 2002 showed that, at the time, a 39.3 sq m apartment cost the equivalent of 4.6 times the median annual income. The report’s authors cited academic research that tied the trend towards pricier housing to restrictive land-use regulations.
The city’s unaffordability was nearly 40% more than the next priciest city in the rankings, Vancouver, Canada, which had a median multiple of 12.6, while Sydney, Australia was next on the list at 11.7 and Melbourne ranked fourth at 9.7.
The most unaffordable place in the US remained Santa Cruz, California, where at least you might go surfing while paying for your home which averages 9.6 times the median income, while in famously expensive San Francisco, the median home price is still just 8.8 times the median income – only enough to rank 10th most outrageous globally.
Compared to Singapore, Hong Kong’s affordability looks particularly daunting. The survey stated that a median-priced home sells for 4.6 times the median income
Hong Kong’s government has approached the city’s housing crisis by forming an advisory task force which at the end of last month released a recommendation focused on large scale reclamation projects, which aims to add 3,250 hectares of new land to the city’s development pipeline, albeit without a clear time.
Critics meanwhile, pointed out that the city’s government, which in the 2017-2018 fiscal year derived 26.6% of its revenue from land sales, and another 15.4% from stamp duties on real estate sales, has a vested interest in keeping housing prices elevated.