Would-be American home-buyers can take heart: U.S. housing is more affordable than in other English-speaking countries in the world, according to a worldwide study of metropolitan areas.
The median home price in the United States as a whole was three times pre-tax household income in the third quarter of 2011, on the cusp of what Demographia, a public policy firm which conducted the survey, deems "affordable". The company, which examined the markets in Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom and the United States, uses a “Median Multiple” test for its affordability criteria. This takes the median house prices in the market and divides it by the gross (before tax) annual median household income. A score of 3 or under is deemed 'affordable'. Results between 4.1 and 5.0 are 'seriously unaffordable' and markets scoring a median multiple of over 5.1 are deemed to be 'severely unaffordable'.
According to the survey bargains can especially be picked up in Detroit which at a ratio of 1.7 is the cheapest area in America. However not everywhere in the United States is looking like a good deal: the most unaffordable U.S. markets were San Jose (6.9), San Francisco (6.7), San Diego (6.1), New York (6.1), Los Angeles (5.7) and Boston (5.3), according to the survey.
Hong Kong's ratio of 12.6 made it the least affordable market in the world. After Hong Kong, Autralia's major cities were the most expensive at 6.7 times pretax median household income, followed by New Zealand at 6.4 and Britain at 5.0.