Singapore housing prices more affordable than other major cities: Survey

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Singapore housing prices are indexed as “seriously unaffordable” as its the median house price is 4.6 times the Republic’s median household income.

The survey titled, ’15th Annual Demographia International Housing Affordability Survey (2019)’, conducted by urban planning policy consultancy Demographia in the third quarter last year, covered 309 cities in eight countries, including China, the United States, Australia, the United Kingdom, Canada, Singapore, New Zealand and Ireland. Hong Kong was the only Chinese city in the survey.

“The most affordable major housing markets are in the United States, with a moderately unaffordable Median Multiple of 3.9, followed by Canada (4.3) and Singapore (4.6). Ireland and the United Kingdom both have Median Multiples of 4.8. The major markets of Australia (6.9), New Zealand (9.0) and China (20.9) are severely unaffordable.”

Singapore housing prices

The Demographia International Housing Affordability Survey rates middle-income housing affordability using the “Median Multiple,” which is the median house price divided by the median household income. The Median Multiple is widely used for evaluating housing markets. It has been recommended by the World Bank and the United Nations and has been used by the Joint Center for Housing Studies at Harvard University.

The Median Multiple and other price-to-income multiples (housing affordability multiples) are used to compare housing affordability between markets by the Organization for Economic Cooperation and Development, the International Monetary Fund, The Economist, and other organizations.

The Survey which indexed the Singapore housing prices as “seriously unaffordable” noted that over the past year, there has been moderation of house prices in some of the most unaffordable markets.

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It added that “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.”

When compared with the same Survey conducted last year, the Singapore housing prices has improved by 0.2 points. What the index means is that  it will take an average household 4.6 years to be able to afford housing in Singapore if there were no other expenses.

Although Singapore housing prices are indexed as “seriously unaffordable”, it is miles ahead of Hong Kong.

Gloomy property market outlook for Singapore in the next 2 years

Hong Kong has been indexed as the city with the “least affordable” home prices in the world. The Chinese city not only ranked the worst for the ninth straight year but also set a new record with the highest level ever indexed since the survey began in 2005.

Based on Demographia’s definition, a city with a median multiple of 5.1 or above is considered “severely unaffordable”. The survey showed that the median multiple, or the ratio of the median property price to the median household income, was 20.9 times in Hong Kong.

Professor Terence Chong Tai-leung, executive director of Lau Chor Tak Institute of Global Economics and Finance at the university, in speaking to the Hong Kong Economic Journal said the Hong Kong government needs to learn from its counterpart in Singapore and offer as many public housing units as possible to meet growing public needs.

The survey concluded that there are 9 affordable major housing markets, all in the United States.

“There are 29 severely unaffordable major housing markets, including all in Australia (5), New Zealand (1) and China (1). Thirteen of the major markets in the United States are severely unaffordable (out of 55), seven in the United Kingdom (out of 21 major markets) and two out of Canada’s six.
The most affordable major housing markets are in the United States, with a moderately unaffordable Median Multiple of 3.9, followed by Canada (4.3) and Singapore (4.6). Ireland and the United Kingdom both have Median Multiples of 4.8.
The major markets of Australia (6.9), New Zealand (9.0) and China (20.9) are severely unaffordable. There are 9 affordable major housing markets, all in the United States. Pittsburgh and Rochester are the most affordable, with a Median Multiple of 2.6. Oklahoma City has a Median Multiple of 2.7, while Buffalo, Cincinnati, Cleveland and St. Louis each has a 2.8 Median Multiple. Indianapolis (2.9) and Detroit (3.0) are also affordable.
There are 26 severely unaffordable major housing markets in 2018. Again, Hong Kong is the least affordable, with a Median Multiple of 20.9 up from 19.4 last year. Vancouver has replaced Sydney as the second least affordable, with a Median Multiple of 12.6. With slightly declining house prices, Sydney’s Median Multiple dropped to 11.7.
Melbourne (9.7), San Jose (9.4), Los Angeles (9.2) and Auckland (9.0) were also among the least affordable. San Francisco (8.8), Honolulu (8.6), as well as London (Greater London Authority) and Toronto (both 8.3) were also among the 10 least affordable major markets. Schedule 1 includes Median Multiples for all major markets.”

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