House prices in Singapore are considered “seriously unaffordable”, with a median multiple of 4.6, which means that the median house price is 4.6 times the city-state’s median household income, according to an annual survey conducted by urban planning policy consultancy Demographia in Q3 2018.
The 15th Annual Demographia International Housing Affordability Survey (2019) covered 309 cities in eight countries, including the United States, China (only Hong Kong), the United Kingdom, Australia, Singapore, Canada, Ireland and New Zealand.
The survey found that Hong Kong has the world’s least affordable home prices, with a median multiple of 20.9, up from last year’s 19.4. Vancouver came in second, while Sydney, Melbourne and San Jose came in third, fourth and fifth, respectively.
Los Angeles, Auckland and San Francisco emerged as the sixth, seventh and eighth least affordable housing markets, while London (Greater London Authority) and Toronto were tied in 10th place with a median multiple of 8.3.
“Over the past year, there has been moderation of house prices in some of the most unaffordable markets,” noted the report.
“In some markets, prices have stabilized, while in others actual declines have occurred. However, none of the price declines have been sufficient to materially improve housing affordability. These developments could, in the long run, simply be further indication of the price volatility exhibited associated with stronger land use regulation.”
“Well-functioning” housing markets crucial to housing affordability; middle-income households face "intensifying economic challenges" due to rising residential property prices
The report added that while there has been "significant progress in the reduction of poverty around the world, first in the high-income world and now in other nations," some urban areas of the high-income world might experience a negative impact "as middle-income households face intensifying economic challenges" due to rising prices of residential property.
"In the environment of current urban policy, principally urban containment policy, middle-income housing has become too expensive for many middle-income households and poverty has increased," added the report.
Citing former World Bank principal urban planner Alain Bertaud’s new book (see Introduction: Avoiding Dubious Urban Policies), the report highlighted that "urban policy in cities is being driven by planning that ignores fundamental economics" that could lead to a “costly utopia".
He wrote: “The objective of the book is not to propose new urban forms but to apply already consensual basic economic principles to the practice of urban planning.”
Bertaud added that “The main objective of the planner should be to maintain mobility and housing affordability”.
Economists Edward Glaeser of Harvard University and Joseph Gyourko of the University of Pennsylvania opined that “well-functioning” housing markets are crucial to housing affordability, according to the report.
"This would produce substantial opportunities, permitting residents the widest access to employment and shopping and other pursuits - in short, well-functioning cities (labor markets)."
Read the full report here.
This was first published at PropertyGuru's website, "Singapore Housing Prices Seriously Unaffordable: Survey".