Vancouver and Toronto are two of the top 10 most expensive major urban centers to live in around the world in 2020, according to data collected by the 16th Annual Demographia International Housing Affordability Survey. Vancouver took the second spot in this year’s ranking, while Toronto came in sixth.
Vancouver Holds Second Place Once More
Vancouver ranked as the second-most unaffordable city on the globe for the second year in a row, of all the 309 markets included in the report (from Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, U.K., and the U.S.).
The study highlights the priciest urban centers using the median multiple ratio (median house price divided by median household income). Vancouver’s score of 11.9, second only to Hong Kong’s 20.8, suggests that housing values in the city are almost 12 times more than revenues. This means that Vancouver is not only the most expensive city to live in North America but also the costliest in the Western Hemisphere.
Even though Vancouver’s current median multiple is lower than what it was in 2018 and 2019 (12.6 points each year), affordability issues remain a concern. Prices for homes in Vancouver have been extremely high for years and, according to the 2019 UBS Global Real Estate Bubble Index, the urban center has the sixth-most-concerning housing bubble risk in the world.
Although the BC government implemented a foreign buyers’ tax as well as an empty homes tax in an effort to stabilize the overheated market, extra time may be needed to see the final effects of these measures.
Toronto Became Much Pricier in Time
Toronto continued to move up the Demographia rankings over the years. Back in 2018, the city held the 21st place on the list of the priciest major markets, then climbed to #10 in 2019, only to land on the 6th spot this year.
With a median multiple of 8.6, the city currently ties Auckland, New Zealand and stands out as the second-most expensive Canadian city to live in, as well as the third-most-expensive in the Western Hemisphere.
The numbers show that in 2020, Toronto is more inaccessible than San Jose (which has a score of 8.5 points), San Francisco (8.4 points), and London (8.2 points). In fact, according to the 2019 UBS Global Real Estate Bubble Index, the city has the second-most-concerning housing bubble risk in the world (after only Munich).
Ontario’s provincial government put a foreign buyers tax in place in 2017, which somewhat helped bring down prices for Toronto properties. However, the city’s housing affordability has continued to prove challenging.
3 U.S. Cities Among the Top 10 Most Unaffordable
Three American urban centers made the top 10 list with the most expensive major markets in the world and, as expected, all three are in California.
Los Angeles (#5) is known for its pricier real estate. Although its score dropped slightly from the previous year (from 9.2 down to 9 points), it still moved up into fifth place from #7, meaning homes in Los Angeles are not seeing significant changes in affordability just yet.
San Jose (#8) is the second-most-unaffordable American city to live in, despite falling two spots from #6 last year. The urban center’s overall score also decreased, from 9.4 points to 8.5 points.
Finally, San Francisco (#9 with 8.4 points) is the third-priciest city in California and one of the most expensive in the U.S. overall.
The World’s Most Expensive Housing Markets
For the 10th year in a row, Hong Kong continues to be the world’s most severely unaffordable place to live in. While the urban center’s score of 20.8 points decreased slightly compared to last year, when it was 20.9, its ranking is still nine points higher than the next priciest market in the world.
This year’s top 10 list is completed by two Australian cities, Sydney (#3 with 11 points) and Melbourne (#4 with 9.5 points), Auckland, New Zealand (#6, 8.6 points), and London, U.K (#10, 8.2 points).
For the most part, the increasing housing affordability issues in many of these places around the world can be tied to living expenses that are growing more rapidly than incomes. As such, home prices are becoming less affordable for the middle class, which can leave many buyers with limited housing options to choose from.