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Hong Kong, Sydney housing affordability worsens as New Zealand improves
[SYDNEY] Housing affordability in Hong Kong and Sydney worsened in 2014, a study of 378 metropolitan areas in nine countries showed.
The median home price in Hong Kong was 17 times its median pretax household income, the highest recorded in the 11 years of the survey, and compared with 12.6 times a year earlier, according to consultancy Demographia. Homes in Sydney, the most unaffordable market after Hong Kong and Vancouver, were 9.8 times incomes, compared with 9.2 times earlier. Vancouver remained the same at 10.6 times. All three are considered "severely unaffordable."
Hong Kong home prices surged 12 per cent in the first 11 months of 2014 to a record in November, despite curbs introduced by the government to quell demand. In Sydney, a shortage of supply combined with growing demand for homes pushed prices up 12.4 per cent in 2014, according to CoreLogic Inc. data.
The most expensive markets "have severe land use restrictions that have been associated with higher land prices and, in consequence, higher house prices," Demographia said in the report released Jan 19.
Markets where homes cost more than 3.1 times incomes are unaffordable, and those where the multiple is 5.1 or higher are "severely unaffordable," Demographia said. Cities where homes cost 3 times incomes or less are affordable. The survey compared cities in the US, Canada, UK, Ireland, Hong Kong, Japan, Singapore, New Zealand and Australia.
New Zealand had the biggest improvement in affordability, with prices at 5.2 times incomes compared with 5.5 times in the previous survey. Home price growth there slowed to 4.9 per cent in December from a year earlier, the slowest pace since August 2012, after the government introduced restrictions on loans for more than 80 per cent of a property's value.
The 10 most affordable housing markets were all in the US, led by Detroit and Rochester and Buffalo in New York. San Francisco, San Jose, San Diego and Los Angeles, all in California, were among the least affordable, as were Melbourne, London and Auckland.