London is the least affordable major city in Western Europe for housing, but it might seem like a bargain compared to some of these places across the world.
The most expensive place to live in the world, when the cost of housing is compared to average income, has been revealed to be Caracas, the capital of Venezuela.
According to data released by Bloomberg, the average worker there brings home a monthly wage of just $31 (around £23). But the average monthly rent is $416 and mortgage payments average $1,971 – equating the cost to a staggering 3,849.2% of income.
Emerging economies seem to offer the most expensive housing in relation to income. Kiev in Ukraine is second on the list, with the cost of housing at 372.3% higher than the average monthly pay, followed by Hanoi in Vietnam (334%), Mumbai in India (283.7%) and Buenos Aires in Argentina (253.5%).
Other capital cities in the top 10 include Bogota in Colombia, where average monthly pay is $410 compared to rent at $599 and mortgage payments at $1,404, and Beijing in China, where residents bring home $1,287 a month while rent costs $1,748 and mortgages are $4,092 a month in average.
In London, average monthly rent and mortgage payments equate to 135% of monthly net income – which is still unaffordable for most, but not on the same scale as the top 10.
Enrique Martínez-García, a senior research economist at the Federal Reserve Bank of Dallas, said: “Not having access to credit is a challenge to develop a healthy housing market. But opening it up too fast might be a problem as well; it might actually lead to a boom-bust episode.”
And the most affordable?
The most affordable place to live in the world, based on the same measures, is Riyadh in Saudi Arabia. Here, the average monthly income is $1,755, while rent costs $760 on average and monthly mortgage payments come in at $343 – meaning the cost of accommodation compared to income is 31.4%.
Seven of the top 10 most affordable places to live are in North America (four in the US and three in Canada). Houston is number two on the list, where monthly housing costs are just 31.6% of pay, followed by Philadelphia (40%), Calgary (40.5%) and Chicago (45.1%).
However, as US lenders set the general rule that people should spend a maximum of 28% of net income on housing costs – or the cost of buying a 1,000-square-foot home or renting a three-bedroom property – not a single one of the 105 cities ranked in the Index meet the requirements.
If affordability was based on up to 50% of monthly wages being spent on housing, only 12 places on the list would fall within the limits.
