top of page

Global Housing Crisis: Surging Housing Prices Threaten the Middle Class (Toronto & Vancouver Too!)

Toronto ranks number ten in the list of the most “impossibly affordable” cities in the world.

Vancouver comes into the third place just after Hong Kong and Sydney.

The results come from the latest research report on international housing affordability conducted by Chapman University in California.

You have probably seen headlines everywhere talking about the unaffordability in Toronto and Vancouver.

That’s not what I want to focus on today.

I want to zoom out and give you a bigger picture on what’s happening worldwide.

Let’s start by talking about the middle class.

What’s your definition of the middle class?



Not very poor, but not very rich either?

If I have to pick one signature of the middle class, I would say it is the ability to own a home.

For decades, housing prices generally rose in line with household incomes.

As late as the 1990s, house prices were three times or less than household incomes in pretty much all the housing markets of Canada, the US, Australia and the UK.

So the majority of us have grown up with the concept that you just need to get good grades in school, get a professional job, make a decent income, then you can buy a house.

However, this concept has been broken, not just in Canada, but worldwide.

Housing prices have escalated far above household incomes.

The price to income ratio has tripled in markets such as San Francisco, Sydney and Vancouver.

Housing affordability is deteriorating very quickly and it is not just happening in Canada, it is a worldwide crisis.

If you have been following me for a few years, you know I have been talking about the rich getting richer and the poor getting poorer, and the pandemic is going to widen that gap quickly.

That’s exactly what we are witnessing right now, the middle class is shrinking.

We can talk non-stop about all the different reasons that contributed to the crisis, but today, I want to share one underlying reason that was pointed out in the research report.

If you enjoy this kind of episode where I deep dive and analyze a report with you, not just sharing an eye-catching headline, give me a like, subscribe and hit the bell so I know you like to watch!

Let’s take a look at the top 10 most unaffordable cities in the world.

Hong Kong tops the list with a median multiple of 16.7, which means the median house price is 16.7 times the median household income.

There are 3 Australian cities in the top 10.

In 2023, Australian markets have a median multiple of 9.7, which has deteriorated from 6.9 in 2019.

That means the median house price used to be around 7 times the median household income pre-pandemic, now it is almost 10 times the income post-pandemic.

There are 5 American cities in this list.

Then we have Vancouver in third place, with a median multiple of 12.3, which has slightly deteriorated from the pre-pandemic 11.9 in 2019.

Toronto in tenth place, with a median multiple of 9.3, it was 8.6 pre-pandemic.

So what’s the main housing price accelerator during those pandemic years?

Remote work.

There was a demand shock for housing as people spent a lot more time at home.

A research conducted by the University of California estimated that nearly two-thirds of the US house price increase could be attributed to the shift to remote work.

Perhaps a lot of people enjoy working from home, but they have probably never thought that the price to pay is actually so expensive.

Going forward, we probably won’t see the same rate of housing price increase like the pandemic years.

But there’s one underlying reason why it is hard for housing affordability to return to previous levels.

Over the past 50 years, urban planners in big cities around the world essentially use the same planning strategy.

They aim to increase densities.

Grow up, but not grow big.

They draw boundaries, they limit areas that can be built by zoning policies.

We’ve definitely seen those in Toronto, right?

The Greenbelt that cannot be built on.

All the parking lots turned into condos in downtown Toronto.

This urban planning strategy makes sense because it is much more feasible in terms of price and execution to build public infrastructures when you pack people together.

Let’s take a look at the top 10 most livable cities in the world.

The assessment is based on stability, healthcare, culture and environment, education and infrastructure.

You can see that half of the most livable cities are also the most unaffordable.

So is the urban planning strategy good or bad?

The most livable cities were built based on that planning.

But of course, everything has pros and cons.

And the side effect of that is, the buildable lands become limited.

When things are limited, prices go up.

For decades, home prices generally rose at about the same rate as income and home ownership became more widespread.

But affordability is disappearing in high-income nations as housing costs now far outpace income growth.

The crisis stems principally from land use policies that artificially restrict housing supply, driving up land prices and making home ownership unattainable for many.

That’s the central message that the research report wants to deliver.

In order for affordability to return to previous levels, is the solution for the governments to open up more land?

That’s what Doug Ford tried to do when he wanted to open up the Greenbelt, but we saw how that went into a disaster.

It is not simple for the governments to change their urban planning, zoning and housing policies.

Perhaps another question to ask is, do the governments actually want affordability to return to previous levels?

Maybe not.

Things are constantly changing rapidly in this world, maybe we have to change some traditional concepts of attaining home ownership in big cities.

What do you think?

I’d like to hear your thoughts.


  • Facebook
  • Instagram
  • YouTube
bottom of page