It’s getting pricey down under. The 2008 Demographia International Housing Affordability Survey has ranked the New Zealand and Australian housing markets as the most unaffordable in the English-speaking world.
The survey examined 227 urban markets and rated them by the ‘median multiple’ method, the method recommended by the UN and the World Bank, where the average house price of a market is divided by the average annual household income. Results showed that the New Zealand and Australian urban markets have the worst housing affordability as it costs the average Aussie or Kiwi about 6.3 of their annual household earnings to purchase a house. The United Kingdom was not too far behind (5.5), followed by Ireland (4.7), the United States (3.6) and Canada (3.1).
The way in which the survey grades property is defined along clear parameters: property worth less than 3 times the annual salary is judged ‘affordable’; three to four times ‘moderately unaffordable’; four to five times ‘seriously unaffordable’ and property over five times the annual household income as ‘severely unaffordable.’ Based on local average interest rates, it takes an average New Zealander a whopping 18.6 years of income to finance housing costs and mortgage interest. Similarly, it would take Australians 17.9 years, the British 14.1 years, the Irish 9.6 years, Americans 8.3 years and Canadians 7.9 years. New Zealand is the only surveyed nation in which all of its markets are ‘severely unaffordable.’
So if you had the misconception that moving down under might save you money, think again.