The ratio of property prices to household income fell to 18.8 in the third quarter of last year, meaning that a Hong Kong household would need to go without food and drink for 18.8 years to buy a home, making it the most unaffordable city in the world for the 13th consecutive year, but a significant reduction of 4.4 years from the 23.2 years it will take to buy a home in the third quarter of 2021, and the biggest drop in the report's 19-year history.

According to the latest International Housing Affordability report released by international public policy consultancy Demographia, a home price to income ratio of 5.1 and above is considered Severely Unaffordable, with Hong Kong topping the list at 18.8. Hong Kong tops the list at 18.8, with Sydney, Vancouver, Honolulu and San Jose ranking second to fifth, at 13.3, 12, 11.8 and 11.5 respectively.

The top three most affordable markets were Pittsburgh (3.1), Rochester (3.2), Cleveland and St. Louis (3.5) in the US.

The survey compares housing affordability ratios, calculated by dividing the median house price in a city by the median annual household income, for a total of 94 major markets in eight countries including Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom and the United States, based on house prices and incomes as of the third quarter of 2022, with larger values being less affordable.

Hong Kong was the only Chinese city covered in the survey. According to the report, the Central Government has given Hong Kong a clear mandate to improve housing affordability and increase living space.

Property prices in Hong Kong fell by more than 15 per cent last year, ending a 13-year run of gains, amid a raging new epidemic, rising interest rates and a sluggish economy. Provisional figures for the Residential Property Price Index for January this year show that property prices have ended a seven-month decline and rebounded slightly by 0.6 per cent month-on-month.

The latest figures mean that Hong Kong families will need to go without food and drink for 18.8 years before they can buy a home, a significant reduction of 4.4 years from the 23.2 years it will take to buy a home in the third quarter of 2021.

According to the Government's announcement in the fourth quarter of last year, the median monthly income of Hong Kong people in the third quarter was $20,000, which means an annual income of $240,000, and if you do not eat and drink for 18.8 years, you can save up to about $4.51 million. If we refer to the local secondary market, we can buy small and medium-sized flats in Tuen Mun, Sha Tin and Ma On Shan with $4.51 million.

However, Hong Kong people are facing a number of increases in public utility charges, including increases in bus and MTR fares, electricity tariff increases by the two power companies, and so on, as well as rising living costs due to global inflation, which will offset some of the relief brought about by the fall in property prices.

On the other hand, although Hong Kong was hit by the triple whammy of the epidemic, interest rate hike and stock market crash last year, according to a research report by Ricacorp Properties, the average sale price of first-hand private residential properties registered last year was about $11,289,200, down 16.6% year-on-year, while the average sale price of each second-hand private residential property registered was about $9,040,300, a slight drop of nearly 1.4% year-on-year, which is obviously significantly lower than the above-mentioned 18.8 years of savings for a family without food and drink. This means that the average citizen who "wants to live better" still has to work harder, or even "double" his or her efforts.

Demographia also notes that the difference in cost of living in most cities can be explained by differences in housing affordability. A growing body of research suggests that there is a strong correlation between the housing affordability and cost of living crises that many countries and regions are experiencing and the decline in birth rates.

The report also points out that deteriorating affordability is an existential threat to the middle class. The rising cost of living faced by the middle class, in the form of rising housing prices, is 'a major factor in the increase in middle class expenditure'.

In addition, as housing becomes more unaffordable, households will migrate to more affordable markets. This can be observed in the net migration in the US and Canadian housing markets, particularly in California, and in Toronto and Vancouver.