The experts tell us that housing is more affordable now than it has been for, well, donkey’s years. Property prices in the US have tumbled like never before as the economy stops and starts and never really quite gets going. Indeed, this is the same the world over, which poses an interesting question… Just how affordable is housing in the US at the moment, and how does it compare to other countries in the world?
It’s difficult to assess just how affordable housing is, as there are so many factors to take into account. So instead of spending hours and hours researching, we’re just going to simplify things by looking at current property prices in various countries and comparing this data with how much people earn. One of the easiest ways to do this is by looking at the GDP per capita of various countries.
The following infographic, created by the graphic designers at Saffery, provides an overview of the current cost of housing in fifty countries spread across five continents. The infographic shows the average cost per square meter of real estate for each country, and also provides data on each country’s GDP, which should give us a rough idea of just how affordable real estate is in the world right now.
(Note that clicking on the infographic will allow you to zoom in and see more easily)
As you can see, the infographic throws up some pretty interesting figures. The average cost of real estate in the US appears to be incredibly low, at just $1,376 per square meter, a little bit more than the cost of a home in Egypt and slightly cheaper than it is in Indonesia.
Taking GDP per capita into account however, what might be affordable to the average US citizen is a totally different story for the average Egyptian or Indonesian. In the US, current GDP per capita is recorded at a healthy $47,200. So this means we’re talking roughly 3% of our earnings to buy one square meter of property in the US.
For the average Egyptian, where one square meter of real estate equates to around 18% of his earnings, we can see that housing suddenly isn’t so cheap after all.
So where does compare with the US? Certainly not India, where housing affordability has, according to our infographic at any rate, exploded through the roof. Compare the average cost per square meter of $12,913 to the GDP per capita of just $3,500, and suddenly we know why so many people there are forced to live in tin shacks – a home is quite simply out of reach to the vast majority of the country’s population.
Even our cousins across the Atlantic are struggling to compete. Take the UK, where the cost per square meter is roughly half the GDP per capita, or Italy, where you are talking thirty years of wages to buy a home. The majority of other developed nations are in a similar boat – housing anywhere else is expensive right now.
In fact, it would seem as if no other country can even come close to reaching the affordability of housing in the US at the moment. The UAE probably comes closest, with the infographic showing it takes roughly eight year’s earnings to pay off the cost of a home, followed by Luxembourg where the average home can be bought for a little over ten year’s earnings.
Of course, as I pointed out at the beginning of this post, we are simplifying things here. But there’s no denying that the infographic lays out the bare facts plain and simple – compared to the rest of the world, housing in the US is very affordable indeed.
So perhaps now we can finally stop worrying about foreclosures and interest rates and bla bla bla, and instead just appreciate the fact we can all afford somewhere to live? After all, that’s not something that many other people in the world can say 🙂
Refer the Annual Demographia International Housing Affordability Survey http://www.demographia.com for information on housing markets, loosely referred to as the Anglo world.