Canada's Housing Bubble

Jan 26, 2011 Laura Baziuk vancouver.24hrs.ca

Vancouver has again been ranked as one of the least affordable places in the world to purchase a home, according to a new survey released this week.

The Canada-based Frontier Centre for Public Policy ranked 325 cities worldwide on a citizen’s ability to afford a home there – the ratio between the median cost of a house and the annual median household income.

A city with a ratio of 3.0 or under is considered affordable. That means the average person in that city will have to save three years of income to be able to afford an average-priced house.

This year, Vancouver’s ratio is 9.5, meaning it takes nearly a decade of earnings to buy a median-priced home, according to the survey. That’s up from 9.3 years last year, considering Vancouver’s median annual income is $63,100 and the median cost for a home is $602,000.

That’s the third highest out of all the major markets – following Hong Kong with a ratio of 11.4 and Sydney with 9.6. London was tied for sixth with San Francisco at 7.2, while New York came in 15th at 6.1.

In Canada, the top four least affordable cities were all in B.C., including Victoria (7.1), Abbotsford (6.5) and Kelowna (5.9). In fifth and sixth spots were Montreal (5.2) and Toronto (5.1).

The most affordable place to live, the survey said, was Atlanta, Ga., at 2.3.

In Vancouver, notorious for its expensive housing prices, a narrow, two-storey house on a tiny, six-metre-wide lot in Dunbar is valued at $904,000, provincial assessment records show.

“That really puts a lot of housing outside people’s reach,” said Lindsey Meredith, an economics and marketing expert at Simon Fraser University. Not only are countless people forced onto the streets, “the younger folk who don’t have the income cash flow, they obviously migrate out to the [Fraser] Valley”.

Prices are high because many people move here from both inside and outside Canada, and Vancouver is touted as one of the world’s most livable cities. Meredith added neither of those forces was showing any sign of letting up.