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News : Property Last Updated: Jan 23, 2012 - 9:04 AM


International study says Irish house prices almost back to normal affordability; Vancouver overtakes Sydney as least-affordable housing market after Hong Kong
By Finfacts Team
Jan 23, 2012 - 8:59 AM

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Irish house prices have now nearly returned to normal affordability, following the housing bubble while Vancouver overtook Sydney as the least-affordable housing market after Hong Kong, among large English-speaking cities, as  rose faster than incomes, an international study of 325 metropolitan areas worldwide shows.

The Annual Demographia International Housing Affordability Survey’s rate housing affordability, based on the Median Multiple - - that is, the median house price divided by the gross annual median household income of specific urban markets, for the 3rd quarter of the previous year.

The authors say “median multiple” is a robust measure - - essential for the basic understanding of the structural health (or otherwise) of a specific urban market. If housing prices exceeds 3.0 times annual household income (Median Multiple), it illustrates that there are serious political impediments that need to be addressed, to the normal supply of new housing on the fringes of the specific distressed urban markets.

The fringes of an urban market are the only effectively responsive supply or inflation vents.

In Ireland, Dublin and Limerick were the least affordable markets with a Median Multiples of 3.4. Waterford (2.8) and  Galway (3.0) were rated as affordable, the first such ratings in Ireland and the first outside Canada and the United States in the history of the Demographia International Housing Affordability Survey. For the first time, Ireland had no seriously unaffordable and no severely unaffordable markets. Ireland is the only nation without metropolitan markets in the severely unaffordable and seriously unaffordable categories (Table 9).

Wendell Cox and Hugh Pavletich say that while Hong Kong is the most severely unaffordable housing at a staggering 12.6 Median Multiple (the highest ever recorded within the history of the Surveys) - - Australia with its abundant land supply has the most pervasive housing affordability problem (5.6 MM); followed by New Zealand with a small population of just 4.4 million (5.2 MM); the United Kingdom (5.1 MM); Canada (3.5 MM); Ireland with its housing bubble collapsing (3.4 MM) while the United States overall is affordable (3.0
MM).

Large swathes of middle North America did not experience urban governance and planning failure and unnecessary housing bubbles through this past decade. They remained throughout, healthy and normal housing markets (other than some within the “rust belt”). Normal healthy urban markets through the building cycle, should oscillate within the2.0 to 3.0 Median Multiple range. Generally (unless there is serious over production of new stock, such as the open market of Atlanta), it indicates a distressed urban market experience severe economic adversity, if it falls below the 2.0 Median Multiple.

Annual Demographia International Housing Affordability Survey [pdf]

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