Demographia International Housing Affordability

Survey: 2015

With comparisons to External Indexes for China and Korea

Introduction by

International Housing Affordability Survey

Between 2000 and 2050, the world’s urban population will grow by almost 80% and most of this growth will be in developing countries: The population of developing countries will grow by 2.6 billion people. The primary mission of the NYU Urban Expansion Program is to assist the municipalities of rapidly growing cities in making room for their inevitable expansion and making realistic projections of the future land needs in a sustainable manner, ensuring that land remains plentiful and affordable.

It has become quite evident that we cannot hope to slow down the urbanization process or to shift populations among cities. However, when we translate this population growth to the expansion of urban areas needed to accommodate it, there is a lot we can do about it. We all understand what it means to prepare adequate lands for urban

expansion, enough land to accommodate both residences and workplaces, so as to ensure that land—and particularly residential land—remains affordable for all. Unfortunately, municipalities of many rapidly growing cities often underestimate the amount of land needed to accommodate urban expansion. In the minority of cases where expansion is effectively contained by draconian laws, it typically results in land supply bottlenecks that render housing unaffordable to the great majority of residents.

The NYU Urban Expansion Program seeks to demonstrate the feasibility of making realistic preparations on the ground in all world regions. Its goal, in its most ambitious form, is to implement country urban expansion initiatives in a dozen countries by 2020. To-date, there are two country urban expansion initiatives in advanced stages, one in Ethiopia and one in Colombia. Partnership funding has now been secured for a third initiative in India and is in the process of being secured in Mexico.

The initiative does not aim to produce paper plans as its final goal, but to empower municipalities to create their own action programs and to accompany them on the road to their implementation.

The Ethiopia Urban Expansion Initiative

According to UN estimates, Ethiopia’s urban population will triple between 2010 and 2040. The Ethiopia program focuses on four rapidly growing cities that are also regional capitals—Mekelle, Adama, Hawassa, and Bahir Dar. Because urban population growth in Ethiopia will be accompanied by economic development and the increasing availability of inexpensive transport, the annual consumption of urban land per person will grow as well.

(A short video on the Ethiopia Urban Expansion Initiative can be seen at: https://www.youtube.com/watch?v=XQ7kUhTxJOM).

Following a summer 2013 training workshop in Addis Ababa, municipal teams in the four participating cities commenced a work program involving the designation of new municipal boundaries and the drafting of phased implementation schedules. By December 2014, the 25-year expansion plans for each city were sufficiently detailed to begin extensive consultations with residents and local officials in the surrounding rural areas (see figure 3).

In November 2014, Phase II of the Ethiopia Urban Expansion Initiative was initiated with the addition of three cities in each of the four regions. As part of the Phase II action program, the Ethiopia Initiative is also supporting curriculum development at five universities located in the regional capitals, so as to ensure that cities undertaking urban expansion plans have the necessary capacity to plan and implement them.

The Colombia Urban Expansion Initiative

The Colombia Urban Expansion Initiative, like all other country initiatives, is divided into two phases. In Phase I, the country team reached out to the municipalities of rapidly growing cities to sign cooperation agreements. In September 2013, the mayors of the participating cities—Valledupar, Montería, Santa Marta, Tunja and Yopal—together with their municipal teams participated in a workshop in Cartagena, Colombia. Following the workshop, the focus of the work turned to the two cities making faster progress than the others—Valledupar and Montería (see figure 4). Phase II has now been initiated and is expected to be completed in late 2015.

(A short video on the Colombia Urban Expansion Initiative can be seen at https://www.youtube.com/watch?v=0tVpkeDD7ok ).

Senior Research Scholar and Adjunct Professor of Urban Planning,

Leader, The NYU Urban Expansion Program,

The NYU Stern Urbanization Project, Stern School of Business,

New York University

Highlights from

Previous Introductions to the

RankNationMetropolitan Market Median Multiple1IrelandLimerick2.01U.S.Rockford, IL2.01U.S.Terre Haute, IN2.01U.S.Utica, NY2.01U.S.Youngstown, OH-PA2.06U.S.Detroit, MI2.16U.S.Rochester, MN2.16U.S.Sioux City, IA, NE, SD2.16U.S.Warner Robbins, GA2.110CanadaMoncton, NB2.210IrelandWaterford2.210U.S.Decatur, IL2.210U.S.Topeka, KS2.2Table 8All 378 Markets: Top 10 Affordable

14 House price data for Australia is from multiple sources, the most important being the Real Estate Industry Association of Queensland (Queensland Market Monitor), the Real Estate Institute of Victoria, the Real Estate Institute of South Australia, the Real Estate Institute of Western Australia, Australian Property Monitors, the Real Estate Institute of Australia and various real estate internet web sites. House price data for some smaller markets is year to date data.

This is in significant contrast to broad housing affordability that existed before implementation of urban containment (urban consolidation) policies. Before urban consolidation was adopted, each of Australia's major markets had housing that was affordable.

Among the major metropolitan area markets the overall Median Multiple was 6.5. The least affordable market was Sydney, with a Median Multiple of 9.8. This is a substantial increase from last year's 9.0. This makes Sydney the third least affordable out of the 86 major markets rated in this Survey.

Housing affordability also deteriorated in Melbourne, rising to a Median Multiple of 8.7 in 2014 from 8.3 in 2013. Melbourne ranked 6th least affordable of the 86 major markets. Housing affordability deteriorated slightly in Adelaide (from 6.3 to 6.4), Perth (from 6.0 to 6.1) and Brisbane (from 5.8 to 6.0).

For the 11th year in a row ... all of Australia's five major metropolitan areas were severely unaffordable

There were signs of considerable improvement, however, among the smaller markets of Australia. Gladstone (QLD) achieved a moderately unaffordable rating, with a median multiple of 3.9. Townsville (QLD) and Latrobe (VIC) tied for fourth most affordable market, with a seriously unaffordable Median Multiple of 4.3.

For the first time in the 11 years of the Demographia International Housing Affordability Survey, Australia had markets that were rated as affordable. The most affordable market was Karratha, in Western Australia's Pilbara, with a median multiple of 2.6. Kalgoorlie, also in Western Australia was the second most affordable market, with a median multiple of 2.8. These improvements appear related to resource industry related demand decreases.

Vancouver retained its longstanding record among the worst markets for housing affordability.

Canada had a seriously unaffordable major market Median Multiple of 4.3 in 2014 and a moderately unaffordable Median Multiple of 3.9 overall.

The deterioration of housing affordability continued in Toronto

All Markets: