Vancouver has become one of Canada’s most robust real estate markets. Consequently, Vancouver’s cost of living has increased, and Vancouver housing affordability has been labeled unbearable. Yet, it is still one of the most desirable places to live in the world, with a steady stream of new immigrants and residents moving to the city every year and preferring these housing prices. How do we reconcile these two facts?
Vancouver is one of the most expensive cities in Canada. However, if you evaluate Vancouver’s affordability and how it compares to other cities in the US, Western Europe, and Asia (instead of the standard comparison to smaller Canadian housing prices). In that case, you uncover a very different story.
We think this is one common misstep the conversation about Vancouver affordability has taken, comparing Vancouver to the wrong cities.
Vancouver is dramatically less affordable than smaller Canadian towns and cities, but the lifestyle is much more comparable to other global metropolitan cities. In other words, Vancouver has also seen progress in the price-to-income ratio in recent years. Moreover, housing affordability and supply have become a top priority of provincial and federal governments.
In this article, we will cover the following topics:
- How does housing affordability relate to income in a Vancouver household?
- How does Vancouver compare to other cities around the world? (including analysis through the affordability index and price-to-income ratio) .
- Other variables which might impact people’s desire to live in a place like “livability” and happiness.
Vancouver Housing Affordability and Income
Before jumping into the specific analysis of Vancouver affordability, let’s define some of the terms we will use. If you have a background in real estate, economics, or similar, you can likely skip this section.
Affordability and Price-to-Income Ratio
Affordability is measured by examining the average cost of living in a particular place compared to the average household income of the residents. To determine whether or not a person lives in an affordable place, one must first understand their income level and other essential monthly expenses (housing, food, gas/transportation, etc.).
Housing affordability measures how much it costs to own or rent a home about household income. Housing affordability is a significant factor in determining overall affordability. Generally, spending no more than 30% of your income on housing is considered financially responsible.
Price-to-income ratio is the value between the price of a median home and the median annual household income in a particular area. The higher the percentage, the less affordable a city is. As the index value rises, Vancouver’s cost of living also increases.
Learn more about how the Price-to-Income Ratio is calculated.
The Affordability index measures the share of income a representative household would put toward housing. As defined by the Bank of Canada: “the housing affordability index is meant to measure the share of disposable income that a representative household would put toward the housing-related expense.”
The index uses the value of one to depict when the median-income family has sufficient income to purchase a median-priced existing home. To clarify, values above one show that the housing market is more affordable. Further, values less than one indicate that the housing market is less affordable.
Learn more about how the Affordability Index of Canadian housing prices is calculated.
Vancouver Affordability for New Permanent Residents
Vancouver is one of the most expensive cities in Canada, but it’s still cheaper than many other major cities worldwide. This is a significant draw for anyone considering moving here from another country.
Vancouver is home to immigrants from all over the world. The city is currently home to thousands of new legal immigrants who have chosen to stay in Vancouver and become Canadian permanent residents. Specifically, most permanent resident applicants in 2021 were from India, China, the Philippines, Nigeria, and France.
The price-to-income ratio (PIR) and affordability index of major cities in these countries are much higher than Vancouver’s.
PIR & Affordability Index Table
|Country||# of PRs (2021)||City||Price to Income Ratio||Affordability Index|
To illustrate, Vancouver’s price-to-income ratio is the lowest at only 11.8, making it the most affordable city on the list. This would be an appealing prospect for new immigrants and allow them to have more disposable income and thus a much better quality of life in Vancouver than in their home country.
Specifically, this is a blended ratio and some more costly and unaffordable regions in Metro Vancouver. For instance, Statistics Canada’s newly released analysis, “The highest median PIRs were 17.2 in West Vancouver and 12.2 in Richmond.”
Nonetheless, even these higher PIRs would place those municipalities in the bottom half of the list. Additionally, more affordable areas sit below the blended ratio, like Surrey, which has a PIR of 8.57, or Burnaby, which has a PIR of 7.93.
The price-to-income ratio and affordability index clearly show aspects of the affordability analysis that might not always be considered when discussing Vancouver affordability.
Looking at the affordability index, the most affordable city is Paris, which is close but doesn’t surpass the median, at .92. Then, the second most affordable housing market is found in Lagos at .38. At the same time, Shanghai and Mumbai are tied at .29. Manila, at .26, is the city with the least affordable housing market.
Most importantly, none of these cities surpass the median or are close to the Vancouver affordability index at 1.35. This is making Vancouver the most affordable city on the list once again.
Vancouver Affordability — Global Comparison
Vancouver is an expensive city to live in and has been for some time. The previous analysis is not intended to defy this. Still, it does show why Vancouver’s reputation is exaggerated and that, in a global comparison, Vancouver is more affordable than we think.
Just so we don’t get called out for cherry-picking data with the previous list of popular cities, we extensively looked at data from Numbeo. In fact, this company collects user-submitted data about living costs worldwide.
Thus, we found some interesting trends regarding housing affordability in Vancouver.
- Vancouver still is more affordable than the housing prices in Toronto, Montreal, and New York.
- Vancouver’s affordability is comparable to American cities like Boston, San Jose, and Washington.
- The affordability index in Vancouver is better than 75-80% of major cities, including popular centers like London, Athens, Rome, Lisbon, Stockholm, and Berlin.
Furthermore, the list goes on and on, so if you want to learn more about the global context and compare the affordability of other cities around the globe, check out the rankings via Numbeo.
Vancouver Affordability & Happiness
Affordability is a huge aspect of why people flock to a city. However, it is not the only one. Vancouver is known for its residents’ incredible quality of life—the area has excellent health care, great schools, and plenty of jobs. Therefore, the impact of this quality of life is reflected in the genuine happiness and fulfillment of Vancouver residents, who report loving their community and feel supported by their neighbors and local businesses.
One measurable way to evaluate happiness is the “life evaluation value,” which looks at the average amount of disposable income. The life evaluation value in Canada is 7.025. To put this into perspective, this gives Canada 15th place in the global “Happiness” rankings, a rating that entails a big part of Vancouver.
In short, Vancouver is an expensive city to live in. That is to say that Vancouver’s cost of living isn’t low. However, for those looking for an urban environment and a high quality of life, it is still one of the best cities in the world.
The analysis of the factors detailed in this article reveals how inexpensive life in Vancouver can be compared to global cities and Canadian housing prices, especially where we see the highest levels of permanent residents move from. Certainly, the cost of living is high, but with higher income levels and more government spending, there’s a possible opportunity to enjoy a much higher standard of living.
Did you find the information and the indexes listed in this article helpful? Would you say that it depicts the reality of Vancouver affordability, or does Vancouver deserve its reputation?
Please share your thoughts with us on social media or reach out to [email protected].
Research & Articles on Vancouver Affordability
Secretariat, Treasury Board of Canada. “Minister Fortier Further Highlights Affordable Housing Investments in Budget 2022 in Brampton.” Canada.ca, Government of Canada (Vancouver Affordability), 13 Apr. 2022.
Wolf, Sarah. “Report: Housing Outpaces Incomes in Vancouver and Cost of Living.” The Columbian, 7 Dec. 2021.
Gordon, Josh. Vancouver’s Affordability and Housing Crisis: Causes, Consequences, and Solutions. 2016. Internet resource.
Moos, Markus, & Skaburskis, Andrejs. (2010). The globalization of urban housing markets: Immigration, changing housing demand, and Vancouver cost of living but. Urban Geography, 31(6), 724–749.
Statistics Canada. 2022. (table). Census Profile. 2021 Census of Population. Statistics Canada Catalogue no. 98-316-X2021001. Ottawa. Released July 13, 2022.
El-Assal, Kareem. “How Canada Landed 405,000 New Immigrants in 2021.” CIC News, Canadian Housing Prices and Immigration News, 10 Feb. 2022.
2022-2024 Immigration Levels Plan
Admission of PR Residents
World Happiness Report 2022