Shelter Cost
Median Multiple Using MEDIAN Family Income
Median Multiple Using MEDIAN Household Income
Affordability measuring is using the equation of
housing affordability = median house price / gross annual median household income
to assess housing affordability of a city, a province or a country (Angel, 2014).
When comparing cities with different scales and levels of income, affordability can represent whether the housing price in one city is reasonable and relatively affordable by local residents while housing cost merely shows one side of the problem – the absolute number and lack of relative comparisons that include more variables. Thereby, affordability measuring plays a significant role in policy making that reduces poverty and facilitates healthy growth of local real estate company.
The Housing Affordability Rating is categorized into 4 groups according to the Median Multiple (house price/household income) by Demographia. Detail as the table below.
| Rating | Median Multiple |
| Severely Unaffordable | >5.1 |
| Seriously Unaffordable | 4.1-5.0 |
| Moderately Unaffordable | 3.1-4.0 |
| Affordable | <3.0 |
Table 1. Demographia Housing Affordability Rating Categories (Angels, 2014)
This Median Multiple Category classification is generally trustworthy to major cities in the world yet short of credibility in small cities and developing countries. In addition, different elements and factors prone to influence affordability in different cities. Thus, this type of delegate is insufficient to represent all housing markets which means we need to categorize housing affordability upon circumstances as well.
Nevertheless, affordability can be one of the indicators of a city’s “livability”. This implies that other respects should also be paid attention to, such as happiness, education, fundamental infrastructure, criminal frequency and environment.
Reference:
Angel, S. (2014). 11th Annual Demographia International Housing Affordability Survey: 2015 – Ratings for Metropolitan Markets – Australia・Canada・China (Hong Kong)・Ireland・Japan・New Zealand・Singapore・United Kindom・United States with comparisons to External Indexes for China and Korea. P7-9 Retrieved from http://www.demographia.com/dhi.pdf
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