DEMOGRAPHIA

INTERNATIONAL HOUSING
AFFORDABILITY
2022 EDITION

Presented by the Urban Reform Institute and the Frontier Centre for Public Policy
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TABLE OF CONTENTS

Introduction v

Executive Summary 1

1 Assessing Housing Affordability 3

2 Context: The Pandemic Demand Shock 4

3 International Housing Affordability in 2021 6

4 Threat to Middle-Income Standard of Living  10

5 Severely Unaffordable Housing:

The Ultimate Agglomeration Diseconomy 13

Sources and Methods 18

Photo credits: Cover and Table of Contents photos by La Citta Vita on Flickr, used under CC 2.0 License
TABLES

ES-2 Housing Affordability Ratings by Nation 1

ES-1 Demographia Housing Affordability Ratings 1
1 Demographia Housing Affordability Ratings 3
2 Number of Severely Unaffordable Markets by Nation 5
3 Housing Affordability Ratings by Nation 6
4 Housing Markets Ranked by Affordability 14
5 All Housing Markets by Nation 16

FIGURES

 1 Demand Shock: Housing Affordability 5

 2  Largest Housing Affordability Deterioration 5
 3  International House Price-to-Income Ratios 5
 4  Middle-Income Housing Affordability 6
 5  Housing Affordability Range 1981-2021: Australia 7
 6  Middle-Income Housing Affordability: Canada 7
 7  Housing Affordability Range 1971-2021: Canada 8
 8  Median House Price to Median Earnings: Wales, England & Regions 9
 9  U.S. Housing Affordability by Category 9
10  Housing Affordability Range 1969-2021: U.S. 10
11  Housing Share of Excess Costs of Living: U.S. 11
12  Urban Containment Effect 12
Introduction

Introduction

The Urban Reform Institute and the Frontier Centre for Public Policy are pleased to present the
2022 edition of Demographia International Housing Affordability. This report provides housing
affordability ratings, using the median multiple, a measurement of income in relation to housing
prices, for 92 major markets (metropolitan areas) in eight nations for the third quarter of 2021.

As the pandemic and lockdowns continued into a second year, the movement of households from
denser urban neighborhoods to larger homes, often with large yards (gardens) in suburban and
outlying areas has continued. The result has been to drive up prices at unprecedented rates in
many markets. As a result many low-income and middle-income households who already have
suffered the worst consequences from housing inflation will see their standards of living further
decline.

As we approached publication, there were two stark reminders of the worsening situation. The
National Association of Home Builders announced that nearly 70% of US households cannot
afford the median (middle) priced house, while Canada’s Parliamentary Budget Officer reported
that house prices had virtually doubled in just six years.

Housing affordability is particularly critical due to the strong increase in remote working (tele-
work) during the pandemic which is accelerating the movement to more affordable places. It will
likely also help flatten or even reduce prices in the highest cost housing markets as other house-
holds seek less costly housing elsewhere.

We hope that the losses sustained during the pandemic will be quickly reversed and the increas-
ing inequality attributable to higher house prices will become a thing of the past.

The author, Wendell Cox is a senior fellow at both the Frontier Centre for Public Policy and the
Urban Reform Institute.

Charles Blain Peter Holle

President President
Urban Reform Institute. Frontier Centre for Public Policy
3900 Essex Lane, Suite 1200 203-2727 Portage Avenue
Houston, Texas 77027 Winnipeg, Manitoba R3J 0R2

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  v

Executive Summary

Executive Summary

Demographia International Housing Affordability rates middle-income housing affordability

in 92 major housing markets in eight nations :Australia, Canada, China, Ireland, New Zealand,
Singapore, the United Kingdom and the United States). This edition covers the third quarter
(September quarter) of 2021.

Assessing Housing Affordability: Sometimes housing affordability is evaluated by simply com-

paring house prices. However, without consideration of incomes, housing affordability cannot
be assessed with any real meaning for potential buyers. Housing affordability is house prices in
relation to incomes.

Demographia International Housing ES-1 Demographia Table ES-1Housing

DEMOGRAPHIA HOUSING AFFORDABILITY RATINGS
Affordability uses the “median multiple” to Affordability Ratings Median Multiple
Housing Affordability Rating
rate middle-income housing affordability
Affordable 3.0 & Under
(Table ES-1). The median multiple is a Moderately Unaffordable 3.1 to 4.0
price-to-income ratio, which is the median Seriously Unaffordable 4.1 to 5.0
Severely Unaffordable 5.1 & Over
house price divided by the gross median
Median multiple: Median house price divided by median household income
household income (pre-tax).

Middle-income housing affordability is rated in four categories, ranging from the most affordable
(“affordable”) to the least affordable (severely affordable):

Housing markets are metropolitan areas, which are also labor markets. In a well-functioning
market, the median priced house should be affordable to a large portion of middle-income house-
holds, as was overwhelmingly the case a few decades ago.

Housing affordability comparisons can be made, (1) between housing markets (such as compar-
ison between Adelaide and Melbourne) or (2) over time within the same housing market (such
between years in Adelaide).

Housing affordability in 2021 is summarized by nation in Table ES-2.

ES-2 HousingHousing
Affordability Table ES-2
Affordability Ratings by Nation: Totals by Market
Ratings by Nation
Affordable
Moderately Seriously Severely
Median by
Nation Unaffordable Unaffordable Unaffordable Total
(3.0 &Under)  Nation
(3.1-4.0) (4.1-5.0) (5.1 &Over)
Australia 0 0 0 5 5 8.0
Canada 0 2 0 4 6 6.0
China: Hong Kong 0 0 0 1 1 23.2
Ireland 0 0 0 1 1 5.7
New Zealand 0 0 0 1 1 11.2
Singapore 0 0 0 1 1 5.8
United Kingdom 0 1 9 11 21 5.1
United States 1 9 19 27 56 5.0
TOTAL 1 12 28 51 92 5.2

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  1

Executive Summary

International Housing Affordability in 2021: Housing affordability in 2021 is considerably worse

than before, with a five times increase in markets with at median multiples of at 10.0 or more as
just a decade ago.

The least affordable market is Hong Kong, with a median multiple of 23.2, followed by Sydney at 15.3,
Vancouver at 13.3, San Jose at 12.6 and Melbourne at 12.1. The most affordable market is Pittsburgh,
at 2.7, followed by Oklahoma City and Rochester at 3.3, with Edmonton and St. Louis at 3.6.

Housing affordability for all 92 markets is shown by median multiple in Table 4 and by nation in
Table 5 (following Section 5 in the report below).

Context: The Pandemic Demand Shock: There has been an unprecedented deterioration in hous-
ing affordability during the pandemic. The number of severely unaffordable markets rose 60% in
2021 compared to 2019, the last pre-pandemic year.

Lowering the Middle-Income Standard of Living: There is a broad view that declining housing
affordability is driving higher costs of living that threaten the future of the middle-class.

In Under Pressure: The Squeezed Middle-Class, the OECD finds that the middle-class faces ever
costs of living and that rising owned house prices are the “main driver of rising middle-class
expenditure.”

French economist Thomas Piketty’s analysis of growing wealth inequality also evidences the de-
teriorating standards of living middle-income and lower income households. In the United States
more than 85% of cost of living differences between high cost and average cost metropolitan
areas are due to housing costs.

Academic research associates the declining housing affordability over recent decades with
stronger land use regulation. In particular, urban containment regulation can produce substantial-
ly higher costs. In Rethinking Urban Sprawl: Moving Toward Sustainable Cities, OECD concludes
that the urban growth boundaries and greenbelts of urban containment must be accompanied by
sufficient land for urban expansion to maintain affordability. This land needs to be competitively
priced to keep house prices from rising disproportionately to incomes. In housing markets with
the least affordable housing, urban containment policy is typical.

Severely Unaffordable Housing: The Ultimate Agglomeration Diseconomy: Economists have

long recognized the positive agglomeration economies of urban areas. Yet, more recently, there
has been a strong association between falling standards of living and the most stringent land use
regulation, especially for those with middle-incomes and low-incomes. The failure to maintain
housing affordability may be the ultimate agglomeration diseconomy (negative impacts of larger
cities, as opposed to benefits).

Elaboration and sources are in the report below.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  2

1 Assessing Housing Affordability

DEMOGRAPHIA INTERNATIONAL HOUSING

AFFORDABILITY: 2022 EDITION
1
Demographia International Housing Affordability rates middle-income housing affordability
2
in 92 major housing markets in eight nations: Australia, Canada, China, Ireland, New Zealand,
Singapore, the United Kingdom and the United States. This 2022 edition rates housing affordabili-
ty for the third quarter (September quarter) of 2021.

1 Assessing Housing Affordability

Sometimes housing affordability is evaluated simply by comparing house prices. However,

without consideration of incomes, housing affordability cannot be assessed. Housing affordability
is house prices in relation to incomes.

Demographia International Housing

Affordability uses the “median multiple” to 1DEMOGRAPHIA
Demographia HOUSING Housing
Table 1
AFFORDABILITY RATINGS
rate middle-income housing affordability. Affordability
Housing Ratings Median Multiple
Affordability Rating
The median multiple is a price-to-income Affordable 3.0 & Under
ratio of the median house price divided Moderately Unaffordable 3.1 to 4.0
Seriously Unaffordable 4.1 to 5.0
by the gross median household income.
Severely Unaffordable 5.1 & Over
Price-to-income ratios have been widely
3
Median multiple: Median house price divided by median household income
used, such as by the World Bank, the
United Nations, the Organization for International Cooperation and Development (OECD), the Joint
Center for Housing Studies at Harvard University and others. Median price and income measures
better reflect the economic impacts on middle-income and lower-income households, as opposed
to averages, which are skewed upward by the inclusion of the highest incomes and prices.

Middle-income housing affordability is rated in four categories, ranging from the most affordable
(“affordable”) to the least affordable (severely affordable), as indicated in Table 1 (above).

1 Demographia International Housing Affordability provides analysis similar to the major market analysis in the 16
editions of the Demographia International Housing Affordability Survey, co-authored by Wendell Cox and Hugh
Pavletich (2005 to 2020).
2 Major metropolitan areas have 1,000,000 or more residents.
3 The Housing Indicators Program, [Link]
Resources/336387-1169578899171/[Link]. Also see Shlomo Angel, Housing Policy Matters: A Global
Analysis. Oxford University Press, 2000.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  3

2 Context: The Pandemic Demand Shock

The Geography of Housing Affordability

Most international housing affordability comparisons are at national level. However, these higher
level housing affordability measures miss the substantial differences in housing affordability
between housing markets in the same nations. For this reason, Demographia focuses at the
housing market level within nations. Regrettably, much housing affordability analysis, both media
and academic overlooks these differences.

A housing market is defined by the ability of residents to reach employment by daily commutes.
Generally this can be defined as a maximum 60 minute one-way commute time, while average
work trip times tend to be about 30 minutes in most areas. Housing markets are thus also labor
4
markets, which are also called metropolitan areas. In a well-functioning market, the median
priced house should be affordable to middle-income households. Such affordability was the
reality in nearly all markets included in this report.

Housing affordability comparisons can be made, (1) between housing markets (such as compar-
ison between Adelaide and Melbourne) or (2) over time within the same housing market (such
between years in Adelaide).

2 Context: The Pandemic Demand Shock

There has been an unprecedented deterioration in housing affordability. The driving factor has
been the result of the pandemic and its related demand shock. According to Sam Khater, chief
economist at the US Federal Home Loan Mortgage Corporation (Freddie Mac) characterized “the
effect of the Covid-19 pandemic” as “unusual in that it spurred housing demand because high-
er-income households who were able to work from home wanted more space and were willing to
live farther from their offices. At the same time, the pandemic caused supply-chain bottlenecks
and permitting delays that slowed new-home construction.” The pandemic continues to disrupt
standards of living, housing markets and national economies.

Further, it is likely that housing supply shortages in markets that have become more stringently
regulated could have worsened the pandemic housing affordability losses.

4 Housing markets (and labor markets) are generally metropolitan areas, which are the “functional” definition of
cities. This is in contrast to individual municipalities, often called cities, and are typically numerous in all but a few
of the housing markets in Demographia International Housing Affordability.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  4

2 Context: The Pandemic Demand Shock

Table 2 There has been a strong trend away from

2 Number of Severely
Number of Severely Unaffordable Markets by Nation
Pre-Pandemic and 2021
affordability. The number of severely unafford-
able markets rose 60% in 2021 compared to
Unaffordable
Nation Markets
2019  by
2021 Change
2019, the last pre-pandemic year (Figure 1).
Nation
Australia 5 5 0 There were also more seriously unaffordable
Canada 2 4 2
China: Hong Kong 1 1 0 markets. At the same time, the number of
Ireland 0 1 1 affordable and moderately affordable markets
New Zealand 1 1 0
Singapore 0 1 1 declined by nearly two thirds.
United Kingdom 8 11 3
United States 14 27 13
At the national level, the number of severely
TOTAL 31 51 20 unaffordable markets increased by 2 in
Canada, by 3 in the United Kingdom and by 14
in the United States (Table 2, above).

1 Demand Shock: Housing Affordability Some markets have experienced exceptionally

large median multiple increases in the two
years since before the pandemic (Figure 2).
For example, housing affordability deteriorated
by 4.1 years of median household income
in San Jose, which was nearly sufficient to
purchase the median priced house in 1996
(4.2), compared to the present 12.6. Similarly,
Sydney’s increase of 4.3 median multiple
points nearly equaled that needed to purchase
the median priced house in 1986 (4.5), well
below the 2021 15.3.

All of these increases are after prolonged housing affordability deterioration starting from 1990,
when national price-to-income ratios were “affordable,” at 3.0 or less in Australia, Canada, Ireland,
New Zealand, the United Kingdom and the United States (Figure 3).

3 International House Price-to-Income Ratios

2 Largest Housing Affordability Deterioration

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  5

3 International Housing Affordability in 2021

3 International Housing Affordability in 2021

Housing affordability in 2021 is summarized by nation in Table 3.

3 Housing Affordability
Table 3

RatingsModerately
by Nation
Housing Affordability Ratings by Nation: Totals by Market
Seriously Severely
Affordable Median by
Nation Unaffordable Unaffordable Unaffordable
(3.0 &Under)  Total Nation
(3.1-4.0) (4.1-5.0) (5.1 &Over)
Australia 0 0 0 5 5 8.0
Canada 0 2 0 4 6 6.0
China: Hong Kong 0 0 0 1 1 23.2
Ireland 0 0 0 1 1 5.7
New Zealand 0 0 0 1 1 11.2
Singapore 0 0 0 1 1 5.8
United Kingdom 0 1 9 11 21 5.1
United States 1 9 19 27 56 5.0
TOTAL 1 12 28 51 92 5.2

Housing affordability in 2021 is considerably worse than before. There are now five times as
many markets with median multiples of at least 10.0 as a decade ago, up to 11 from two.

The least affordable market is Hong Kong, with a median multiple of 23.2, followed by Sydney at
15.3, Vancouver at 13.3, San Jose at 12.6 and Melbourne at 12.1. The most affordable market is
Pittsburgh, at 2.7, followed by Oklahoma City and Rochester at 3.3, with Edmonton and St. Louis
at 3.6.

Housing affordability for all 92 markets is shown by median multiple in Table 4 and by nation in
Table 5.

Australia: Australian markets have a median multiple of 8.0, up from 6.9 two years ago (2019).
This is an increase of 1.1 years of median household income.

All of five Australia’s major housing markets have been severely unaffordable since the early 2000s.

Sydney has the least affordable market, with

4 Middle-Income Housing Affordability a median multiple of 15.3, the second least
affordable market internationally (ranking 91st
in affordability out of 92 markets). No market
except for Hong Kong has reached this level of
unaffordability in the 18 years of Demographia
reports. Since before the pandemic, Sydney
median prices have risen 4.3 years of median
household income. This two year increase
alone is nearly equal to the 4.5 years of income
required to buy the median priced Sydney
house in 1986 (Figure 4).

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  6

3 International Housing Affordability in 2021

With a median multiple of 12.1, Melbourne is the 88th least affordable of the 92 markets. This
elevated median multiple has only been reached before in Australia by Sydney.

Perth is the most affordable market in Australia, yet has a severely affordable median multiple of
7.1. Perth is the 73th least affordable out of 92.

The affordability range between markets in Australia has widened materially from 2.0 median
multiple points in 1981 to 8.2 in 2021. The range expanded substantially during the pandemic
5
(Figure 5).

5 Housing Affordability Range 1981-2021: Australia 6 Middle-Income Housing Affordability: Canada

Canada: The markets in Canada have a median multiple of 6.0, up from 4.4 in pre-pandemic 2019.
This increase of 1.6 years in median household income is the largest among included nations in
the report. Four of the six markets in Canada are rated severely unaffordable.

Vancouver is the 90th least affordable of the 92 markets, with higher median multiples only
in Hong Kong and Sydney. Vancouver is the least affordable market in Canada, with a 13.3
median multiple. This is up from 11.9 in 2019, an increase of 1.4 years of median household
income. Severely unaffordable housing has spread from Vancouver to smaller markets, as
metro Vancouver has shed domestic migration to smaller markets in British Columbia, such as
Chilliwack, the Fraser Valley, and Kelowna and markets on Vancouver Island.

Toronto is the second least affordable market in Canada and ranks 83rd out of 92 markets in
international affordability, with a median multiple of 10.5. This is up from the 2019 figure of 8.6.
indicating that the median price has increased 1.9 years of median household income.

Overall housing affordability in Toronto has deteriorated precipitously, by 6.6 median multiple
points from 2004, when the median multiple was 3.9. By contrast, there was no housing afford-
6
ability deterioration in the more than three decades from 1970 to 2004. Severely unaffordable
housing has spread to smaller markets in Ontario, such as Kitchener-Waterloo, Brantford, London
and Guelph, as residents of metro Toronto seek lower costs of living.

5  By 2004, all of the major markets in Australia and New Zealand had become severely unaffordable, unlike the
United States and Canada.
6  Derived from Statistics Canada and Demographia data.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  7

3 International Housing Affordability in 2021

Montreal (6.1) and Ottawa-Gatineau (5.4) are also severely unaffordable. The most affordable
market is Edmonton, with the median multiple of 3.6 (Figure 6, above).

In Canada, the affordability difference among

the six major markets was 1.5 median multiple
points in 1971, rising to 2.5 in the mid-2000s
7 Housing Affordability Range 1971-2021: Canada
during the pandemic has risen to 9.3, more
than six times that of 1971 (Figure 7).

China: Hong Kong is the least affordable

market in Demographia International Housing
Affordability, with a median multiple of 23.2.
This is an increase of 2.4 points from the 20.9
in 2019. About half of this increase is due to
7
lower incomes.

There are important proposals to increase the housing supply in Hong Kong to improve housing
affordability. These include a new 2.5 million resident “metropolis” on the undeveloped land
between Hong Kong and adjacent Shenzhen.

Ireland: Dublin became severely unaffordable this year, with a median multiple of 5.7. This is up
from 4.6 in 2019, an increase of 1.1 years of median household income.

New Zealand: Auckland has a severely unaffordable median multiple of 11.2. This is up from 8.6
in 2019, an increase of 2.6 times the annual median household income. Auckland ranks 85th in
affordability out of 92 markets.

Singapore: In the early 1960s Singapore had a desperate housing situation, which has been
8
characterized as “unhygienic slums and crowded squatter settlements.” To address the issue,
Singapore established the Housing and Development Board (HDB), which in its 1964 Annual
Report expressed the intention to ...encourage a property-owning democracy in Singapore and to
enable Singapore citizens in the lower middle-income group to own their own homes. This objec-
tive has been achieved, with an 88% home ownership rate in 2020. Moreover, this housing afford-
ability objective is unique the nations covered by Demographia International Housing Affordability.

Singapore’s median multiple rose from 4.6 in 2019, to a severely unaffordable 5.8 in 2021, reflect-
ing the impacts of the pandemic shock. Singapore ranks 53rd in affordability out of 92 markets.

United Kingdom: The United Kingdom had a 5.1 median multiple in 2021. This is up from 4.6 in
2019, equal to a six month increase in median household income. There are 11 severely unafford-
able markets, up from eight in 2019.

7  Hong Kong produces the most current annual household income data among the markets in Demographia
International Housing Affordability.
8  Parts of this discussion are based on “Focus on Singapore,” the introduction to last year’s 16th Annual
Demographia Housing Affordability Survey.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  8

3 International Housing Affordability in 2021

London is the least affordable market in the United Kingdom, with median multiple of 8.0, ranking
79th out of 92 in affordability. The most affordable market was Glasgow, with a median multiple of
3.8 ranking 7th in affordability out of 92.

The United Kingdom has the longest expe-

8 Median House Price to Median Earnings: Wales,
England & Regions rience with urban containment policy, yet
house price increases have continued to race
ahead of incomes. By 2020, median house
prices rose 2.2 times relative to earnings in
9
England, and 1.9 times in Wales (Figure 8).
In London (Greater London Authority) prices
more than tripled relative to earnings between
1997 and 2020.

United States: The US median multiple is 5.0.

This is up from 3.9 in 2019, an increase of 1.1
years of median household income. There
were 27 severely unaffordable markets in
9 U.S. Housing Affordability by Category
2021, compared to 14 in 2019.

California has the largest concentration of

severely unaffordable markets, with four of
the nation’s five highest cost markets relative
to incomes (Figure 9).The most costly among
these is San Jose at a median multiple of
12.6, ranking 89th affordable out of 92 (fourth
least affordable). Honolulu has a median
multiple of 12.0 and ranks 87th in affordability
out of 92. San Francisco has a median multi-
ple of 11.8 and ranks 86th in affordability, Los
Angeles has a median multiple of 10.7 and ranks 84th in affordability. San Diego has a median
multiple of 10.1, ranking 82nd worse in affordability.

But there are a number of other severely unaffordable rated markets, with the least affordable
in Miami (8.1), Seattle (7.5), Riverside-San Bernardino (7.4), Denver (7.2), New York (7.1), Boston
(7.0) and Portland (7.0). Each of these markets had median multiples under 6.0 just two years
ago. Seven other markets deteriorated to median multiples of 6.0 or more, Sacramento, Las
Vegas, Fresno, Phoenix, Salt Lake City, Austin and Tucson. Eight more became severely unaf-
fordable with median multiples above 5.0, Tampa-St. Petersburg, Providence, Orlando, Charlotte,
Washington, Richmond, Milwaukee and Jacksonville.

9  Median multiple data is not readily available.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  9

4 Threat to Middle-Income Standard of Living

The most affordable market was Pittsburgh, with median multiple of 2.6, which was also the
most affordable internationally. The changing demand of the pandemic has pushed many mar-
kets out of “affordable “ratings, with only Pittsburgh remaining among the 10 from 2019.

10 Housing Affordability Range 1969-2021: U.S. Oklahoma City (3.3), Rochester (3.3), St. Louis
(3.6), Cleveland (3.7), Cincinnati (3.8), Buffalo
(3.9), Kansas City (4.0), Louisville (4.0) and
Tulsa (4.0) were moderately affordable.

The range between the least affordable and

most affordable markets in the US acceler-
ated from 2019 by more than one-half and
nearly six times from 1970 (Figure 10).

4 Threat to Middle-Income Standard of Living

There is a broad view that deteriorating housing affordability is an existential threat to the
middle-class.

In Under Pressure: The Squeezed Middle-Class, the OECD: “finds that the middle-class faces
ever rising costs relative to incomes and that its survival is threatened.” Further that “…, the cost
of essential parts of the middle-class lifestyle have increased faster than inflation; house prices
have been growing three times faster than household median income over the last two decades.”
Further OECD found that “Housing has been the main driver of rising middle-class expenditure,”
with the largest increases in the costs of ownership (or housing affordability), rather than rents.

Urban Reform Institute Executive Director Joel Kotkin’s book The Coming of Neo-Feudalism: A
Warning to the Global Middle Class  provides a similar perspective.

French economist Thomas Piketty has documented the recent growth wealth inequality around
10
the world. It is not surprising that in this environment, many middle-income and lower income
households have sustained deteriorating standards of living and the causes of this do not bode
well for the future.

10 Thomas Piketty, (2014). Capital in the Twenty-First Century.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  10

4 Threat to Middle-Income Standard of Living

Indeed, pandemic demand shock has reinforced these trends, with unprecedented increases in
house prices relative to incomes.

Housing Affordability and the Cost of Living

Much of the already greater inequality that Piketty described is attributable to increased house
11
values, according to research by Matthew Rognlie, now at Northwestern University.

In the United States more than 85% of cost of

11 Housing Share of Excess Costs of Living: U.S.
living differences between metropolitan areas
(Figure 11) are due to housing costs. Similarly,
Bloomberg reports that nearly all of London’s
higher cost of living is associated with higher
housing costs.

A considerable body of research associates

the deterioration of housing affordability
of recent decades with stronger land use
12
regulation.

For example, Giani La Cava of the Bank for

International Settlements found that rising inequality in the United States was largely associated
with increased housing values in markets with more severe housing supply constraints.

At the same time, many housing markets have adopted stringent land use regulation, especially
urban containment policy, which is associated with substantially higher land costs. In Rethinking
Urban Sprawl: Moving Toward Sustainable Cities, OECD concludes that urban containment pol-
icies, such as urban growth boundaries and greenbelts can lead to higher house prices, unless
sufficient land is maintained for urban expansion (Box: Urban Containment). In housing markets
with the least affordable housing, urban containment policy is typical.

Rognlie (above) suggests that “A natural first step to combat the increasing role of housing wealth
13
would be to reexamine these regulations and expand the housing supply.

11 Matthew Rognlie, “A note on Piketty and diminishing returns to capital,” June 15, 2014. Available online at http://
[Link]/piketty_diminishing_returns.pdf.
12 See, for example, K. Herkenhoff, L. Ohanian, and E. Prescott. 2018. “Tarnishing the Golden and Empire States:
Land-Use Restrictions and the U.S. Economic Slowdown.” Journal of Monetary Economics. [Link]
org/system/files/working_papers/w23790/[Link], Edward Glaeser and Joseph Gyourko. 2018. “The
Economic Implications of Housing Supply.” Journal of Economic Perspectives, [Link]
articles?id=10.1257/jep.32.1.3, Chang-Tai Hsieh and Enrico Moretti. 2019. “Housing Constraints and Spatial
Misallocation.” American Economic Journal: Macroeconomics, [Link]
mac.20170388, Wendell Cox, “A Question of Values: Middle-Income Housing Affordability and Urban Containment
Policy,” Frontier Centre for Public Policy, 2015.[Link]
Question%20of%[Link].
13 Matthew Rognlie, “A note on Piketty and diminishing returns to capital,” June 15, 2014. Available online at
[Link]

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  11

4 Threat to Middle-Income Standard of Living

URBAN CONTAINMENT
The largest housing affordability differences between major metropolitan areas arose as signifi-
cant restrictions on urban fringe housing development were applied. These measures are called
“urban containment” which includes related “growth management” and “compact city” policies. A
principal purpose of urban containment is to curb the physical expansion of urban areas – that is,
14
conversion of rural land to urban land (“urban sprawl” ). Whatever its advantages, urban contain-
ment has been associated with huge cost of living and housing cost escalation relative to in-
comes, thereby increasing poverty and inequality.. This has an important social cost to the many
in society already challenged to maintain their standards of living as costs rise disproportionately.

Urban containment’s prototypical strategy is urban growth boundaries (or greenbelts) that encir-
cle urban areas. Along with other strategies, urban containment make it impossible to profitably
build tracts of housing affordable to middle-income households due to much higher land prices.
According to urban planning literature: “Urban development is steered to the area inside the line
and discouraged (if not prevented) outside it.” Urban containment is contrasted with “...traditional
approaches to land use regulation by the presence of policies that are explicitly designed to limit
15
the development of land outside a defined urban area...”

Harvard University’s William Alonso showed

that the value of land tends to rise from the low
12 Urban Containment Effect agricultural values outside the built up urban
16
area to the center. Normally, without urban
containment, land values tend to rise gradually,
as distances increase from the center. As
noted above, with urban containment, it is
expected that there will be abrupt land value
increases, such as at urban growth boundar-
ies. Land values (and house prices) tend to
be higher throughout the entire area of urban
17
containment (Figure 12 ).

14 See: Judge Glock, “Sprawl is Good: The Environmental Case for Suburbs,” [Link]
no-15-winter-2022/sprawl-is-good-green
15 Arthur C. Nelson and Casey J. Dawkins (2004), “Urban Containment in the United States: History, Models and
Techniques for Regional and Metropolitan Growth Management, “American Planning Association Planning
Advisory Service
16 William Alonso (1964), Location and Land Use: Toward a General Theory of Land Rent (Cambridge, Massachusetts,
Harvard University Press).
17 Figure is adapted from other works dealing with urban growth boundaries. Other graphical representations of this
relationship can be found in Gerrit Knaap and Arthur C. Nelson, The Regulated Landscape: Lessons on State Land
Use Planning from Oregon, Cambridge, Massachusetts: Lincoln Institute of Land Policy, 1992; William A. Fischel,
Zoning Rules! The Economics of Land-use Regulation, Lincoln Institute of Land Policy, 2015; Gerard Mildner, “Public
Policy & Portland’s Real Estate Market,” Quarterly and Urban Development Journal, 4th Quarterly 2009: 1-16, and
others. Under traditional land use regulation, where there is no urban containment boundary, the land price gradient
would be smooth (the green line labeled “Before Urban Growth Boundary”). On the other hand, an abrupt increase
occurs at the urban boundary in an environment with an urban containment boundary (the red line labeled “After
Urban Growth Boundary”).

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  12

5 Severely Unaffordable Housing: The Ultimate Agglomeration Diseconomy

18
Indeed, higher land prices are both an expected and intended result. Planners expected hous-
ing affordability to be maintained by rising densities. However, even with densification, housing
affordability has deteriorated substantially, for example in Sydney, Auckland, Vancouver, Toronto,
San Francisco, Seattle and many other markets.

The OECD described how this can happen. In Rethinking Urban Sprawl: Moving Toward
Sustainable Cities, the OECD cautions that housing affordability can deteriorate if sufficient
19
developable land is not kept available within urban growth boundaries. This urban expansion
land must be large enough to retain the competitive market for land, the preservation of which
20
was stressed by Anthony Downs of the Brookings Institution.

Otherwise land and house prices are likely to escalate disproportionately to incomes, as has
occurred in many markets. According to Alain Bertaud, former principal urban planner at the
World Bank, urban growth boundaries and greenbelts put “arbitrary limits on city expansion” and
21
that “the result is predictably higher prices.”

The largest housing affordability losses have been in markets with urban containment. Before the
current demand shock, all severely unaffordable markets had urban containment.
22
Long-time Reserve Bank of New Zealand Governor Donald Brash commented on the continuing
failure of public policy to restore housing affordability, despite political promises to the contrary:
“One thing I can say with confidence, however, is that house prices will not return to more afford-
able levels until land becomes available at more reasonable prices.”

5 Severely Unaffordable Housing:

The Ultimate Agglomeration Diseconomy
Economists have long recognized the positive agglomeration economies of cities (urban areas).
23
Certainly, the unprecedented prosperity in the last two centuries demonstrates this. Yet, more
recently, there has been a strong association between falling standards of living and the most
stringent land use regulation, especially for those with middle-incomes and low-incomes. The failure
to maintain housing affordability may be the ultimate agglomeration diseconomy, which in some
metropolitan areas more than nullifies the economic benefits of urbanization for many households.

18 Arthur C. Nelson and Casey J. Dawkins, Urban Containment in the United States: History, Models and Techniques
for Regional and Metropolitan Growth Management, American Planning Association Planning Advisory Service.
[Link]
19 Organization for Economic Cooperation and Development (OEDC), Rethinking Urban Sprawl: Moving Towards
Sustainable Cities. 2018, [Link]
20 Anthony Downs, New Visions for Metropolitan America, (1994), [Link]
new-visions-for-metropolitan-america/
21 Bertaud, Order without Design.
22 Governor Brash contributed the Introduction to the 4th Annual Demographia International Housing Affordability
Survey (2008).
23 See: Diedre Nansen McClosky, 2016, Bourgeois Equality How Ideas, Not Capital or Institutions, Enriched the World,
[Link] and Robert J. Gordon, The Rise
and Fall of American Growth: The U.S. Standard of Living since the Civil War, [Link]
content/005364-robert-gordons-notable-history-economics-and-living-standards

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY  13

TABLES

Table 4
HOUSING MARKETS RANKED BY AFFORDABILITY: MOST AFFORDABLE TO LEAST AFFORDABLE
Median Multiple (Median House Price/Median Household Income): 2021: Third Quarter (revised March 9, 2022)
Median Median

4 Housing Markets Ranked2.7by Affordability

Rank Nation Metropolitan Market Multiple Rank Nation Metropolitan Market Multiple
1 U.S. Pittsburgh, PA 46 U.S. Washington, DC-VA-MD-WV 5.2

2 U.S. Oklahoma City, OK 3.3 48 U.K. Birmingham & West Midlands 5.4

2 U.S. Rochester, NY 3.3 49 U.S. Charlotte, NC-SC 5.5

4 Canada Edmonton, AB 3.6 50 Canada Ottawa-Gatineau, ON-QC 5.6

4 U.S. St. Louis,, MO-IL 3.6 51 Ireland Dublin 5.7

6 U.S. Cleveland, OH 3.7 51 U.K. Leicester & Leicestershire 5.7

7 U.K. Glasgow 3.8 53 Singapore Singapore 5.8

7 U.S. Cincinnati, OH-KY-IN 3.8 53 U.K. Northampton & Northamptonshire 5.8

9 U.S. Buffalo, NY 3.9 53 U.K. Swindon & Wiltshire 5.8

10 Canada Calgary, AB 4.0 56 U.S. Orlando, FL 5.9

10 U.S. Kansas City, MO-KS 4.0 56 U.S. Providence, RI-MA 5.9

10 U.S. Louisville, KY-IN 4.0 56 U.S. Tampa-St. Petersburg, FL 5.9

10 U.S. Tulsa, OK 4.0 59 U.S. Tucson, AZ 6.0

14 U.S. Detroit, MI 4.1 60 Canada Montreal, QC 6.1

14 U.S. Hartford, CT 4.1 60 U.K. Plymouth & Devon 6.1

16 U.K. Blackpool & Lancashire 4.2 60 U.S. Austin, TX 6.1

16 U.S. Grand Rapids, MI 4.2 63 U.S. Salt Lake City, UT 6.2

16 U.S. Virginia Beach-Norfolk, VA-NC 4.2 64 U.S. Phoenix, AZ 6.3

19 U.K. Middlesbrough & Durham 4.3 65 U.K. London Exurbs (E & SE England) 6.4

19 U.K. Newcastle & Tyneside 4.3 66 U.K. Bristol-Bath 6.5

19 U.K. Sheffield & South Yorkshire 4.3 66 U.S. Fresno, CA 6.5

19 U.S. Columbus, OH 4.3 68 U.S. Las Vegas, NV 6.6

19 U.S. Indianapolis. IN 4.3 69 U.S. Sacramento, CA 6.7

19 U.S. Minneapolis-St. Paul, MN-WI 4.3 70 U.K. Bournemouth & Dorsett 6.8

25 U.S. Baltimore, MD 4.4 71 U.S. Boston, MA-NH 7.0

25 U.S. Philadelphia, PA-NJ-DE-MD 4.4 71 U.S. Portland, OR-WA 7.0

27 U.K. Derby & Derbyshire 4.5 73 Australia Perth, WA 7.1

27 U.S. Atlanta, GA 4.5 73 U.S. New York, NY-NJ-PA 7.1

27 U.S. Chicago, IL-IN-WI 4.5 75 U.S. Denver, CO 7.2

27 U.S. Houston, TX 4.5 76 Australia Brisbane, QLD 7.4

31 U.K. Liverpool & Merseyside 4.6 76 U.S. Riverside-San Bernardino, CA 7.4

31 U.K. Stoke on Trent & Staffordshire 4.6 78 U.S. Seattle, WA 7.5

31 U.S. Memphis, TN-MS-AR 4.6 79 Australia Adelaide, SA 8.0

34 U.K. Leeds & West Yorkshire 4.7 79 U.K. London (Greater London Authority) 8.0

34 U.S. Birmingham, AL 4.7 81 U.S. Miami, FL 8.1

36 U.K. Hull & Humber 4.8 82 U.S. San Diego, CA 10.1

2021 DEMOGRAPHIA INTERNATIONAL HOUSING

2022 DEMOGRAPHIA
AFFORDABILITY
INTERNATIONAL
| FEBRUARY
HOUSING
2021 AFFORDABILITY  14
TABLES

Table 4, contd.
HOUSING MARKETS RANKED BY AFFORDABILITY: MOST AFFORDABLE TO LEAST AFFORDABLE
Median Multiple (Median House Price/Median Household Income): 2021: Third Quarter (revised March 9, 2022)
Median Median
Rank Nation Metropolitan Market Multiple Rank Nation Metropolitan Market Multiple
36 U.S. Dallas-Fort Worth, TX 4.8 83 Canada Toronto, ON 10.5

36 U.S. San Antonio, TX 4.8 84 U.S. Los Angeles, CA 10.7

39 U.S. New Orleans. LA 4.9 85 N.Z. Auckland 11.2

40 U.K. Manchester / Greater Manchester 5.0 86 U.S. San Francisco, CA 11.8

40 U.K. Nottingham & Nottinghamshire 5.0 87 U.S. Honolulu, HI 12.0

40 U.S. Nashville, TN 5.0 88 Australia Melbourne, VIC 12.1

40 U.S. Raleigh, NC 5.0 89 U.S. San Jose, CA 12.6

44 U.S. Jacksonville, FL 5.1 90 Canada Vancouver, BC 13.3

44 U.S. Milwaukee, WI 5.1 91 Australia Sydney, NSW 15.3

46 U.S. Richmond, VA 5.2 92 China Hong Kong 23.2

2021 DEMOGRAPHIA INTERNATIONAL HOUSING

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AFFORDABILITY
INTERNATIONAL
| FEBRUARY
HOUSING
2021 AFFORDABILITY  15
TABLES

Table 5
ALL HOUSING MARKETS BY NATION
Median Multiple (Median House Price/Median Household Income): 2021: Third Quarter
Median Median

5 All Housing Markets by Nation

Rank Nation Metropolitan Market Multiple Rank Nation Metropolitan Market Multiple
79 Australia Adelaide, SA 8.0 19 U.S. Columbus, OH 4.3

76 Australia Brisbane, QLD 7.4 36 U.S. Dallas-Fort Worth, TX 4.8

88 Australia Melbourne, VIC 12.1 75 U.S. Denver, CO 7.2

73 Australia Perth, WA 7.1 14 U.S. Detroit, MI 4.1

91 Australia Sydney, NSW 15.3 66 U.S. Fresno, CA 6.5

10 Canada Calgary, AB 4.0 16 U.S. Grand Rapids, MI 4.2

4 Canada Edmonton, AB 3.6 14 U.S. Hartford, CT 4.1

60 Canada Montreal, QC 6.1 87 U.S. Honolulu, HI 12.0

50 Canada Ottawa-Gatineau, ON-QC 5.6 27 U.S. Houston, TX 4.5

83 Canada Toronto, ON 10.5 19 U.S. Indianapolis. IN 4.3

90 Canada Vancouver, BC 13.3 44 U.S. Jacksonville, FL 5.1

92 China Hong Kong 23.2 10 U.S. Kansas City, MO-KS 4.0

51 Ireland Dublin 5.7 68 U.S. Las Vegas, NV 6.6

85 N.Z. Auckland 11.2 84 U.S. Los Angeles, CA 10.7

53 Singapore Singapore 5.8 10 U.S. Louisville, KY-IN 4.0

48 U.K. Birmingham & West Midlands 5.4 31 U.S. Memphis, TN-MS-AR 4.6

16 U.K. Blackpool & Lancashire 4.2 81 U.S. Miami, FL 8.1

70 U.K. Bournemouth & Dorsett 6.8 44 U.S. Milwaukee, WI 5.1

66 U.K. Bristol-Bath 6.5 19 U.S. Minneapolis-St. Paul, MN-WI 4.3

27 U.K. Derby & Derbyshire 4.5 40 U.S. Nashville, TN 5.0

7 U.K. Glasgow 3.8 39 U.S. New Orleans. LA 4.9

36 U.K. Hull & Humber 4.8 73 U.S. New York, NY-NJ-PA 7.1

34 U.K. Leeds & West Yorkshire 4.7 2 U.S. Oklahoma City, OK 3.3

51 U.K. Leicester & Leicestershire 5.7 56 U.S. Orlando, FL 5.9

31 U.K. Liverpool & Merseyside 4.6 25 U.S. Philadelphia, PA-NJ-DE-MD 4.4

79 U.K. London (Greater London Authority) 8.0 64 U.S. Phoenix, AZ 6.3

65 U.K. London Exurbs (E & SE England) 6.4 1 U.S. Pittsburgh, PA 2.7

40 U.K. Manchester / Greater Manchester 5.0 71 U.S. Portland, OR-WA 7.0

19 U.K. Middlesbrough & Durham 4.3 56 U.S. Providence, RI-MA 5.9

19 U.K. Newcastle & Tyneside 4.3 40 U.S. Raleigh, NC 5.0

53 U.K. Northampton & Northamptonshire 5.8 46 U.S. Richmond, VA 5.2

40 U.K. Nottingham & Nottinghamshire 5.0 76 U.S. Riverside-San Bernardino, CA 7.4

60 U.K. Plymouth & Devon 6.1 2 U.S. Rochester, NY 3.3

19 U.K. Sheffield & South Yorkshire 4.3 69 U.S. Sacramento, CA 6.7

31 U.K. Stoke on Trent & Staffordshire 4.6 63 U.S. Salt Lake City, UT 6.2

53 U.K. Swindon & Wiltshire 5.8 36 U.S. San Antonio, TX 4.8

27 U.S. Atlanta, GA 4.5 82 U.S. San Diego, CA 10.1

2021 DEMOGRAPHIA INTERNATIONAL HOUSING

2022 DEMOGRAPHIA
AFFORDABILITY
INTERNATIONAL
| FEBRUARY
HOUSING
2021 AFFORDABILITY  16
TABLES

Table 5, contd.
ALL HOUSING MARKETS BY NATION
Median Multiple (Median House Price/Median Household Income): 2021: Third Quarter
Median Median
Rank Nation Metropolitan Market Multiple Rank Nation Metropolitan Market Multiple
60 U.S. Austin, TX 6.1 86 U.S. San Francisco, CA 11.8

25 U.S. Baltimore, MD 4.4 89 U.S. San Jose, CA 12.6

34 U.S. Birmingham, AL 4.7 78 U.S. Seattle, WA 7.5

71 U.S. Boston, MA-NH 7.0 4 U.S. St. Louis,, MO-IL 3.6

9 U.S. Buffalo, NY 3.9 56 U.S. Tampa-St. Petersburg, FL 5.9

49 U.S. Charlotte, NC-SC 5.5 59 U.S. Tucson, AZ 6.0

27 U.S. Chicago, IL-IN-WI 4.5 10 U.S. Tulsa, OK 4.0

7 U.S. Cincinnati, OH-KY-IN 3.8 16 U.S. Virginia Beach-Norfolk, VA-NC 4.2

6 U.S. Cleveland, OH 3.7 46 U.S. Washington, DC-VA-MD-WV 5.2

2021 DEMOGRAPHIA INTERNATIONAL HOUSING

2022 DEMOGRAPHIA
AFFORDABILITY
INTERNATIONAL
| FEBRUARY
HOUSING
2021 AFFORDABILITY  17
SOURCES AND METHODS

Sources and Methods

House price data is estimated from sources reporting on housing types representing the majority
of existing dwellings in each nation. Official government produced sales registers are used where
available (Ireland, Scotland, England and Wales). Other sources include authoritative real estate
time series and market reports.

Pre-tax median household incomes for the present year are estimated based on official govern-
ment data. Income indicators have become more difficult due to pandemic related challenges
faced by government statistical agencies.

CONTACTS:
Urban Reform Institute
Wendell Cox, Senior Fellow
demographia@[Link]

Frontier Centre for Public Policy

Gerard Lucyshyn, VP Research
[Link]@[Link]

BIOGRAPHICAL NOTE:
Author Wendell Cox is a Senior Fellow at the Urban Reform Institute
(Houston) and the Frontier Centre for Public Policy (Winnipeg), as well
as a member of the Board of Advisors at the Center for Demographics
and Policy at Chapman University. He is principal of [Link],
author of Demographia World Urban Areas and was co-author (with Hugh
Pavletich) of the Demographia International Housing Affordability Surveys
(16 annual editions). He was appointed to three terms as a member
of the Los Angeles County Transportation Commission by Mayor Tom
Bradley and by Speaker of the House of Representatives Newt Gingrich to fill the unexpired term
of New Jersey Governor Christine Todd Whitman on the Amtrak Reform Council. He earned a
BA in Government from California State University, Los Angeles and an MBA from Pepperdine
University in Los Angeles.

2022 DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY | MARCH 2022