The World's 10 Most Extremely Unaffordable Housing Markets — Five Are in the U.S.
Understanding the Global Housing Affordability Crisis and Its Impact
Imagine saving every penny of your income for over a decade just to buy a home. For millions in some of the world’s most desirable cities, this is the reality. The 2025 Dermographia International Housing Affordability Survey identifies the 10 most "impossibly unaffordable" housing markets, where the cost of a home far exceeds what the average person can afford. Five of these markets are in the United States, highlighting a growing challenge in some of America’s most iconic cities. In this post, we’ll explore these markets, why they’re so expensive, their impact on residents, potential solutions, and how India’s housing market compares.
What Makes a Housing Market "Impossibly Unaffordable"?
Housing affordability is assessed using the price-to-income ratio, often referred to as the median multiple. This ratio is worked out by dividing the average house price by the average household income in a particular area. For example, if a city’s median home price is $500,000 and the median household income is $50,000, the ratio is 10. A ratio of 3.0 or below is seen as affordable, while anything 9.0 or above is classed as "impossibly unaffordable" according to the Dermographia survey. This means it would take nine or more years of income to buy a home, assuming no other expenses—a daunting prospect for most.
This metric reveals how out of reach homeownership has become in certain cities, driven by factors like limited land, high demand, and restrictive policies. Let’s dive into the top 10 markets and explore why they’re so unaffordable.
The Top 10 Most Unaffordable Housing Markets
The 2025 Demographic survey ranks the following cities as the most unaffordable based on data from the third quarter of 2024:
| Rank | Housing Market | Country/Region | Price-to-Income Ratio |
|---|---|---|---|
| 1 | Hong Kong | Hong Kong | 14.4 |
| 2 | Sydney | Australia | 13.8 |
| 3 | San Jose, California | USA | 12.1 |
| 4 | Vancouver | Canada | 11.8 |
| 5 | Los Angeles | USA | 11.2 |
| 6 | Adelaide | Australia | 10.9 |
| 7 | Honolulu | USA | 10.8 |
| 8 | San Francisco | USA | 10.0 |
| 9 | Melbourne | Australia | 9.7 |
| 10 | San Diego | USA | 9.5 |
Source: Demographia International Housing Affordability 2025 Edition
Five U.S. Cities such as San Jose, Los Angeles, Honolulu, San Francisco, and San Diego feature on the list, highlighting serious affordability problems in America’s coastal areas. These markets are not only expensive but also represent some of the world’s most desirable places to live, work, and invest.
Visual Suggestion: Insert a world map highlighting these 10 cities to show their global distribution.
Why Are These Markets So Expensive?
Each market faces unique pressures that drive up housing costs.
Hong Kong: With over 7 million people packed into 1,104 square kilometers, Hong Kong is one of the world’s densest cities. Limited land and strict government policies on development restrict housing supply. Its status as a global financial hub attracts high-income earners, pushing demand and prices sky-high. For example, the average price per square meter on Hong Kong Island was over HK$186,000 in 2021, making it one of the priciest real estate markets globally (Source: Statista).
Sydney, Australia: Sydney’s allure—beaches, vibrant culture, and strong economy—draws both local and international buyers. Urban containment policies limit development on the city’s outskirts, reducing housing supply. High land values further exacerbate the issue, with median house prices reaching $1.6 million AUD in 2022 (Source: Domain).
San Jose, California, USA: Located in the core of Silicon Valley, San Jose thrives on a flourishing tech sector, driving up housing demand and property prices. High salaries from companies like Apple and Google drive demand, but restrictive zoning laws limit new construction, creating a supply-demand imbalance.
Vancouver, Canada: Vancouver’s housing market is fueled by international investment, particularly from Asia. Foreign buyers often purchase properties as investments, inflating prices beyond what locals can afford. Restrictive zoning also hampers new development.
Los Angeles, California, USA: The glamour of Hollywood, a diverse economy, and a desirable climate make Los Angeles a magnet for residents. However, regulatory barriers to building new homes have not kept pace with demand, pushing prices higher.
Adelaide, Australia: Less globally known, Adelaide’s affordability has worsened due to its high quality of life, low crime rates, and growing popularity. Limited new housing development contributes to rising prices.
Honolulu, Hawaii, USA: As an island city, Honolulu faces severe land constraints. Its status as a tourist hotspot increases demand for properties, both for living and investment.
San Francisco, California, USA: Like San Jose, San Francisco’s tech-driven economy creates high demand. Its iconic status and limited space for new construction make homes scarce and expensive.
Melbourne, Australia: Melbourne’s cultural vibrancy and economic opportunities attract residents, but like Sydney, restrictive urban planning limits housing supply, driving up costs.
San Diego, California, USA: San Diego’s coastal location, military presence, and growing tech sector fuel demand.
Visual Suggestion: Insert a bar chart comparing the price-to-income ratios of these cities, as shown above, to visualize the scale of unaffordability.
Impact on Residents and the Economy
The high cost of housing in these markets has far-reaching consequences:
Financial Strain: Residents often spend over 30% of their income on housing, leaving less for savings, education, or other essentials. In San Francisco, for instance, a median home price 10 times the median income means homeownership is a distant dream for many.
Increased Inequality: Those who own property or bought early benefit from rising values, while others are locked out, widening the wealth gap. This is particularly acute in cities like Hong Kong, where only 51% of residents own homes (Source: Financial Freedom Countdown).
Economic Challenges: High housing costs can deter businesses from setting up in these cities, as employees struggle to afford living there. This can stifle innovation and growth, especially in tech hubs like San Jose and San Francisco.
Social Issues: Unaffordable housing contributes to homelessness and reduced mobility. Young people and lower-income families may leave these cities for more affordable areas, impacting community diversity and vitality.
For example, in Sydney, the average age of first-time homebuyers has reached 38, reflecting the difficulty young people face entering the market (Source: Western Sydney University).
Policies and Initiatives to Improve Affordability
Governments and local authorities are grappling with this crisis, with varying degrees of success:
Hong Kong: Efforts include public housing projects and land reclamation, but these have not kept pace with demand. The Northern Metropolis project aims to create new housing zones, but progress is slow (Source: EY China).
Australia: Proposals to relax urban containment policies in Sydney and Melbourne aim to increase housing supply on city outskirts, where land is cheaper. New Zealand’s similar approach is cited as a potential model (Source: Dermographia).
United States: Cities like San Francisco and San Diego use inclusionary zoning, requiring developers to include affordable units in new projects. Tax incentives for affordable housing are also common, though their impact is limited.
Vancouver: Policies to curb foreign investment, such as taxes on non-resident buyers, aim to reduce speculative demand, but local supply issues persist.
These measures show promise, but comprehensive reforms—like streamlining zoning laws or incentivizing high-density development—are needed to make a significant dent.
Indian Context: A Comparative Perspective
While the top 10 markets represent extreme unaffordability, India faces its own housing challenges. As per the 2024 Magic Bricks Housing Affordability Report, Mumbai's price-to-income ratio stands at 14.3—close to Hong Kong’s 14.4—making it one of the least affordable cities in India. In comparison, cities such as Ahmedabad, Kolkata, and Pune, each with a ratio of 5.0, are considered more affordable and fall within the globally accepted range for moderate housing affordability.
The Indian government has rolled out initiatives such as the Pradhan Mantri Awas Yojana (PMAY), designed to provide affordable housing for the urban poor by 2022, with continued implementation and progress underway in 2025.These programs offer subsidies and low-interest loans, helping families like Ramesh, a teacher from a small village in Maharashtra, secure a home through PMAY’s support. Such initiatives could inspire global markets, though the scale of unaffordability in cities like Hong Kong and Sydney requires more aggressive supply-side reforms.
Visual Suggestion: Insert a comparison chart showing price-to-income ratios for the top 10 global markets alongside Mumbai, Ahmedabad, and Kolkata to highlight differences.
Conclusion: What Does This Mean for the Future?
The "impossibly unaffordable" housing markets underscore a global crisis that demands urgent action. As cities grow and economies evolve, demand for housing in desirable locations will persist. Without increased supply or policy changes, affordability will worsen, potentially excluding younger generations and lower-income families from homeownership.
For individuals, this means exploring more affordable markets or advocating for policy changes. For policymakers, it’s a call to prioritize housing supply, relax restrictive regulations, and learn from successful models like Singapore’s public housing system. In India, programs like PMAY show that targeted interventions can make a difference, offering hope for global solutions.
Actionable Guidance
- For Homebuyers: Research price-to-income ratios before buying. Consider cities with ratios below 5, like Ahmedabad or Pittsburgh, for better affordability. Explore government schemes like PMAY in India or first-time buyer programs elsewhere.
- For Investors: High price-to-income ratios signal strong demand but also risk. Balance investments with markets showing stable growth and affordability.
- For Policymakers: Increase housing supply through zoning reforms, incentivize affordable housing, and study successful models like New Zealand’s land-use policies.
Call-to-Action
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