Demographia International Housing Affordability

1. Introduction

1.1 Background and Purpose of the Report

The 2025 Demographia International Housing Affordability report is a comprehensive annual evaluation of housing affordability across 95 metropolitan markets in eight nations, assessing the relationship between house prices and household incomes as a means to measure how attainable homeownership and housing access are for middle-income households.

Demographia International Housing Affordability

Housing affordability remains a core global socioeconomic challenge. It directly affects living standards, labor mobility, economic productivity, and overall welfare. The report uses the median multiple metric—the ratio of median house prices to median household incomes—to compare housing affordability across different countries and cities, revealing where housing costs relative to incomes make ownership more or less attainable.

1.2 Defining Housing Affordability

In the context of the report, housing affordability means the degree to which average households can reasonably afford homeownership or rental costs without undue financial strain. The median multiple is a widely accepted standard for measuring this: lower ratios indicate more affordable housing, whereas higher multiples point to worsening  affordability conditions.

2. Methodology

2.1 Data Collection and Scope

The report assembles housing market data on prices, incomes, and house price-to-income ratios from official and private sources. It covers markets in:

The primary metric is the median multiple, which divides the median house price by the median household income. This ratio articulates housing affordability in a comparable way across nations and cities, enabling both international and temporal comparisons to assess whether housing markets are affordable, moderately unaffordable, severely unaffordable, or impossibly unaffordable for typical buyers.

3. Housing Affordability Ratings by Nation

3.1 Global Housing Affordability Trends

The 2025 edition reveals that housing affordability has deteriorated significantly in many global markets compared to historical norms. None of the 95 markets studied were categorized as fully “affordable” (median multiple ≤ 3.0), illustrating that  affordability challenges are widespread.

Instead, markets are distributed across the following housing affordability ratings:

For the 2025 report, there were 15 moderately unaffordable, 28 seriously, 40 severely, and 12 impossibly unaffordable markets.

3.2 Examples of Housing Affordability Conditions

Australia

Australia exhibited some of the most extreme housing affordability pressures in the study, with major cities such as Sydney and Melbourne having median multiples well above global norms. These cities ranked among the least affordable worldwide, with Sydney approaching impossibly unaffordable levels.

Canada

Canadian markets demonstrated a wide spread in housing, with Vancouver among the least affordable and other cities such as Edmonton rated relatively more attainable. Nonetheless, overall affordability in Canada worsened compared to earlier decades.

China (Hong Kong)

Hong Kong remained one of the worst housing affordability environments globally, with median multiples significantly above any other market tracked in the report, categorizing it consistently as impossibly unaffordable.

United States

The U.S. housing market illustrated disparities in affordability, with cities like Pittsburgh being among the most affordable internationally, while California markets such as San Jose, San Francisco, and Los Angeles exhibited severe unaffordability.

United Kingdom and Ireland

Both the U.K. and Ireland showed deeply strained housing affordability, especially around London and Dublin, where median multiples have moved far beyond the accessible range for middle-income households.

Singapore and New Zealand

Singapore, though having a higher median multiple than historically, benefited from government policies aimed at improving affordability through programs such as Housing and Development Board flats for citizens. New Zealand also faced serious affordability issues, especially in its largest cities.

4. Historical Context of Housing Affordability

4.1 Past vs. Present Housing Affordability

Historically, many markets—particularly in developed nations—had housing prices closely aligned with median household incomes, making homeownership reachable for middle-income households. In the decades before the 1990s, median multiples of approximately 3.0 or less were common, indicating robust housing affordability.

However, shifts in policy, economic growth, urban planning, and demographic demand have altered this balance. House price increases have substantially outpaced income growth in many regions, resulting in long-term deteriorations in housing affordability.

5. Causes of Housing Affordability Decline

5.1 Urban Planning and Land Use Policies

The report attributes much of the contemporary housing affordability decline to restrictive urban containment policies such as greenbelts, growth boundaries, and zoning restrictions. While these policies aim to limit sprawl and protect the environment, they have the unintended consequence of constraining land supply, driving prices up beyond the reach of many households.

Urban containment disrupts the natural supply of housing land, concentrating demand in limited areas and inflating land and home prices. Since land often comprises the most valuable component of a house, these price increases directly worsen housing affordability for middle-income buyers.

5.2 Speculation and Investment Influences

High levels of speculative investment in housing markets contribute to rising prices and reduced housing affordability. Investors competing with owner-occupiers for properties can push prices beyond levels sustainable for typical households.

6. Consequences of Housing Affordability Challenges

6.1 Middle-Class Homeownership Decline

As housing affordability worsens, middle-income households find it increasingly difficult to achieve homeownership. In many markets, this has resulted in a structural shift where owning a median priced house now requires incomes well above the national median, reducing prospects for middle-class homeownership.

6.2 Migration to More Affordable Areas

The report highlights a trend where households—including younger families—seek more affordable housing markets on the urban periphery or in smaller metropolitan regions. This “voting with their feet” reflects mobility driven more by cost considerations than employment or lifestyle preferences, underscoring how weakened housing affordability shapes broader demographic patterns and regional growth.

7. Housing Affordability and Economic Impacts

7.1 Cost-of-Living Pressures

Housing affordability influences household budgets significantly, as housing costs account for a large share of overall expenditures. Higher housing costs relative to incomes reduce disposable income for other essentials such as healthcare, education, and savings, imposing broader social and economic strain.

7.2 Impacts on Labor Mobility

Poor affordability restricts labor mobility, especially when workers cannot relocate to areas with better job prospects due to prohibitive housing costs. This constraint weakens labor market adaptability and can slow economic growth.

8. Comparative Analysis: Affordability Across Regions

8.1 Affordable vs. Unaffordable Markets

A crucial insight from the report is the clear spectrum of housing across global cities. While a handful of markets remain moderately unaffordable, most fall into serious, severe, or impossible affordability categories—highlighting widespread disparities not only between nations but within them.

For example, Pittsburgh—a U.S. city with better housing affordability—stands in contrast to Hong Kong, Sydney, and Vancouver, where housing affordability pressures are acute, requiring multiple times a household’s income to afford a typical home.

9. Policy Implications and Recommendations

9.1 Revisiting Land Use and Planning Policies

The report strongly suggests that addressing housing affordability requires revisiting established land use and planning policies that restrict development. Removing rigid barriers to land supply and allowing for controlled expansion can promote more balanced housing markets where prices reflect realistic supply and demand dynamics.

9.2 Encouraging Housing Supply Growth

Increasing housing supply—particularly through policies that enable new housing development in high-demand areas—can help improve housing affordability. This includes reforming zoning laws, easing restrictions on infill and greenfield development, and facilitating a variety of housing types suitable for diverse income groups.

9.3 Alternative Housing Models and Subsidies

Supplementary measures, such as affordable housing programs, subsidies for first-time buyers, and targeted financial assistance, can help mitigate the immediate burdens of housing affordability for low- and moderate-income households. These interventions provide short-term relief while broader structural reforms take effect.

10. Conclusion

The 2025 Demographia International Housing Affordability report paints a detailed and concerning picture of housing affordability conditions worldwide. Major findings include deteriorated housing affordability in most developed markets, strong links between planning constraints and rising housing costs, and significant socioeconomic consequences for households and communities.

The persistent difficulties in housing affordability illustrate that affordability challenges cannot be addressed through narrow policy measures alone; they require comprehensive, coordinated approaches involving planning reform, supply expansion, economic policy, and targeted subsidization. Only through holistic and sustained efforts can households regain access to affordable homes, and housing markets achieve greater stability, equity, and sustainability.

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