These 10 cities are now deemed “impossibly unaffordable”

Over the past two decades, buying a home has become significantly more challenging in many countries, especially in the United States. A recent report highlights the struggle of potential home buyers by designating certain major cities as “impossibly unaffordable.”

This report analyzed the gap between average incomes and average home prices. It found that the surge in demand for homes with outdoor spaces during the pandemic, restrictive land use policies to curb urban sprawl, and increased market activity from investors have all driven home prices to new heights.

U.S. cities, particularly those on the West Coast and in Hawaii, dominate the list of the most unaffordable places. According to the annual Demographic International Housing Affordability report, which has monitored house prices for 20 years, five of the top 10 most unaffordable cities are in these areas.

California’s cities, including San Jose, Los Angeles, San Francisco, and San Diego, unsurprisingly rank among the top 10. Honolulu, Hawaii’s capital, also features prominently, coming in sixth among 94 major markets surveyed across eight countries.

Aside from the U.S., Australia is the only other country with multiple cities on the “impossibly unaffordable” list. Leading the charge are Sydney, Melbourne, and Adelaide.

Globally, Hong Kong tops the list. Known for its compact living spaces and exorbitant rents, Hong Kong remains the least affordable city. It stands out as the sole Chinese market in the report.

Despite its top ranking, Hong Kong’s housing market has seen a slight improvement in affordability since the pandemic. House prices declined in 2020 when the government enforced border closures and a zero-Covid policy, along with new national security laws that have affected the city’s appeal.

### Factors Behind High Prices
The report measures housing affordability by comparing the median house price to the gross median household income. It attributes the rise in home prices to increased remote work during the pandemic, which drove a demand for homes with more outdoor space. Additionally, restrictive land use policies, such as urban containment to prevent sprawl, have exacerbated the problem by limiting supply while demand surged.

Investors also contributed to the price hikes, entering the market to capitalize on rising values.

The report suggests that other countries look to New Zealand’s approach as a potential solution. Wendell Cox, a senior fellow at the Frontier Centre for Public Policy, advocated in Canada’s Financial Post for policies similar to New Zealand’s “Going for Housing Growth,” which mandates local authorities to zone for 30 years of housing expansion.

Vancouver and Toronto are among the cities deemed “impossibly unaffordable.” Cox argues that restricting urban growth leads to inflated house prices, higher rents, and increased poverty.

For those unable to wait for policy changes or a market shift, the report identifies the most affordable cities among the 94 surveyed worldwide. These include Pittsburgh, Rochester, and St. Louis in the U.S.; Edmonton and Calgary in Canada; Blackpool and Glasgow in the UK; and Perth and Brisbane in Australia.

The report was prepared by researchers from the Center for Demographics and Policy at Chapman University in California and the Frontier Centre for Public Policy in Canada.

Top 10 “Impossibly Unaffordable” Cities
1. Hong Kong
2. Sydney
3. Vancouver
4. San Jose
5. Los Angeles
6. Honolulu
7. Melbourne
8. San Francisco/Adelaide
9. San Diego
10. Toronto