Vancouver housing ranked third least affordable in the world

Another dubious distinction for Vancouver housing The city has been ranked the world’s third least affordable housing market.

Vancouverites are well aware of the issue of housing unaffordability, but now a new survey is shining a spotlight on just how bad the problem is.

U.S. think tank Demographia says Vancouver is the world's third most unaffordable housing market, just behind Hong Kong, which ranked number one, and Sydney, Australia, in second.

The 10 least affordable cities also include Melbourne, Honolulu, Los Angeles, San Francisco, London and San Diego.

This is the second year Vancouver has been third on the list. However, it is a slight improvement from two years ago, when the same study ranked Vancouver as the second most unaffordable housing market on earth.

The 13th annual study bases its findings on the "median multiple," which is calculated by the median home prices in the area divided by the median household income.

An affordable region has a multiple of 3.0 or under. Vancouver was rated "severely unaffordable," with a multiple of 5.1 and over, as the city added a full year's household income to its house prices in a single year.

The international housing survey looked at more than 400 cities in nine countries: Australia, Canada, China (Hong Kong), Ireland, Japan, New Zealand, Singapore, the United Kingdom and the U.S.

Four out of the top five least affordable Canadian cities are in British Columbia: Vancouver, Victoria, the Fraser Valley and Kelowna.

The most affordable housing markets were found in the U.S., including Rochester and Buffalo, New York, Cleveland, St. Louis and Detroit.

Oliver Hartwich, Executive Director of The New Zealand Initiative, said the median multiple used isn't perfect because it doesn't account for house sizes or build quality, but it does allow a quick comparison of different housing markets and is the best approximation of housing affordability based on incomes.

Hartwich says unaffordable housing is almost everywhere on earth and it's caused by the same factor every time: Housing supply restrictions.

"The more restrictive the market, the more prices will increase over time," he wrote in the study.

The health of the housing market is deteriorating rapidly in Canada, according to the survey, adding that multiple organizations have expressed concern over rapidly rising prices.

Vancouver had already emerged as a severely unaffordable housing market in Demographia's first survey in 2004, which study authors blame on the city's urban containment policies.