5 overseas cities where first home buyers also have it tough

Rates and Fees verified correct on October 26th, 2016

Australia has a notoriously tough housing market for first home buyers, but how does it compare globally?

First home buyers have all but deserted the Australian housing market as median house prices rise ever higher. CoreLogic research head Tim Lawless recently told finder.com.au that first home buyer participation in Sydney had fallen to about 10%, which Lawless said was a record low.

While it’s easy for Aussies locked out of the property market to curse their luck for living in a country where property is so eye-wateringly expensive, are we alone in our home buying struggles? We checked out some of the other countries where first home buyers have it tough.

Hong Kong

Hong Kong tough cities 3

Hong Kong is the only city that consistently tops Australian capitals on lists of least affordable housing markets. The special administrative region of China is one of the world’s most densely populated urban areas, so space is at a premium. Residents of Hong Kong face a number of hurdles in getting into the housing market.

Hong Kong median house prices are 19 times the median pre-tax household income according to a 2016 Demographia survey. The figure puts the city well above Sydney, with a median house price 12.2 times median pre-tax household income, and even further above Melbourne where the median house price is 9.7 times median pre-tax household income. This year marked the sixth year in a row Hong Kong topped Demographia’s list of the world’s least affordable housing markets.

According to the Global Property Guide, the average price per square metre for residential property in Hong Kong is $33,570. By comparison, Global Property Guide puts the average price per square metre of Australian property at $9,525.

First home buyers also won’t be getting a lot for their money in Hong Kong. Australia has the largest average new home size in the world, at 214 square metres according to a CommSec survey. Hong Kong, by contrast, has the world’s smallest at just 45 square metres.


Monaco tough cities 3

It shouldn’t come as a surprise that the jet-setting home of the super rich and lavish royals also has some steep property prices. Monaco, according to Global Property Guide, is actually home to the most expensive property in the world on a per-square-metre basis. The average property in the tiny European kingdom goes for around $64,844 per square metre.

Fortunately, Monaco is also home to the world’s highest median salaries. The World Bank estimates the gross national income per capita in Monaco is more than $245,000. This high salary could come as little comfort for those looking to buy, though. Parking spaces in the principality sell for more than the average per capita income, while studio apartments start at around 4.5 times annual income.


Singapore tough cities 4

The balmy city-state of Singapore has seen house prices decline slightly in recent years, but it’s been of little comfort to Singaporeans whose incomes have also stagnated. According to a 2015 study by UBS, Singapore actually trumped Sydney with a median house price 13 times the median household income. Though prices had already declined by 6% over the three years to the time of the survey, UBS ranked the country as the most at-risk for a housing bubble.

Singapore also beats Australia in price per square metre. According to the Global Property Guide, you can expect to pay about $18,065 per square metre in Singapore. In spite of this, Singapore has one of the highest homeownership rates in the world. According to official government statistics, 90.3% of Singaporeans own a home. Also, much like in Australia, Singapore offers a first home buyer grant. First-time buyers who meet eligibility requirements can receive SGD$20,000 toward the purchase of their first home.


London tough cities 2

The housing affordability situation in London looks different depending upon which data you trust. Demographia’s housing survey puts the city several spots below Sydney, with median house prices 8.5 times median household income. UBS paints a much bleaker picture, ranking London as the world’s second-least affordable city with a median house price 14 times median household income. UBS also ranks London as the global city most in danger of a housing bubble.

The current median house price in London is just over $1 million, which would put the city roughly on par with Sydney. Low and moderate income earners do receive some help, though, in the form of the government’s First Steps London program, a shared ownership scheme which allows renters to buy a portion of the property they’re renting.


Vancouver tough 4

Before finding itself knocked down a peg by Sydney, Vancouver held the dubious distinction of ranking as the world’s second-least affordable city in Demographia’s survey. Median house prices in the Canadian city are 10.8 times the median annual income. That puts the median house price in Vancouver at around $754,000.

Like Sydney and Melbourne, Vancouver has seen a massive influx of foreign investment that some have blamed for rising house prices and lower first home buyer participation. The furore over foreign investment has seen foreign buyers in Vancouver slugged with an additional 15% tax.

British Columbia, the province in which Vancouver is located, does offer eligible first home buyers a $10,000 grant. But that could be little comfort given the difficulty associated with saving a deposit. A study earlier this year by the National Bank of Canada found it would take the average Vancouver first home buyer 11 years to save a deposit for a home.

Adam Smith

Adam has more than five years of experience writing about the Australian home loan market.

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