America may be only the sixth richest nation in the world, but our capital city has the biggest houses among major world cities.
Washington, D.C., has 68.7 square meters of housing floor area per person, well-above second-ranked Melbourne, Australia’s 50.7 square meters, and is a virtual paradise compared with cramped Dar es Salaam, Tanzania, which has 5 square meters per person.
Those are among the 51-country findings of an international housing report by Stephen Malpezzi, associate professor of urban and regional planning at the Wisconsin Center for Urban Land Economics Research in Madison, and Stephen K. Mayo, an economist at Lincoln Institute of Land Policy in Cambridge, Mass. The two compared conditions in major cities from data gathered by World Bank in New York.
“Other countries may have higher per capita incomes, but when you adjust for their high housing prices, and some other costs, we’re on top,” Malpezzi said in an interview.
“Tokyo, for instance. The cost of living there makes New York look like Prairie du Chien. And their real estate market is very inefficient, some of which has to do with their stringent cartel in construction. Our housing is very reasonably priced in comparison to our income,” he said.
Washington’s median-price house costs 3.9 times the national median annual income, they found.
Although not included in the study, Wisconsin has a cost-to-income ratio of 3-to-1, with much of the Midwest being even lower, Malpezzi said.
That’s a definite pinch, but not as bad as Toronto or Paris, where median house prices are 4.2 times their median income and a far cry from Tokyo or Beijing, where median houses are a whopping 11.6 and 14.8 times higher, respectively, than income.
Median is the point at which half of a group are above and half below.
In poverty-stricken Lilongwe, Malawi, the median house price is only 70 percent of the median annual income. Its per capita income is only $200 a year.
The report, which used 1993 data on cities’ floor area per person, housing production per 1,000 people, homeownership rates and house price-to-income ratios, plus national per capita income and mortgage data, is summarized in the center’s fall quarterly publication “The Wisconsin CULER Report,” released recently.
Among its findings: Singapore has the highest homeownership rate–90 percent.
Karachi, Pakistan, has an 83 percent homeownership rate. Tied for third highest, with 80 percent homeownership, are Tel Aviv, Israel, and Santiago, Chile.
The lowest levels of homeownership are found in Beijing, with 8 percent homeownership, and Amsterdam, with 9 percent. Washington, D.C., has a 61 percent homeownership rate, below the estimated 65.4 percent U.S. average.
National per capita income is highest in Finland–$26,040 annually (U.S.). The report looked at houses in Helsinki.
U.S. per capita income is $21,790, trailing Finland, Germany, Norway, Sweden and Japan. Helsinki, Munich, Oslo, Stockholm and Tokyo were the cities studied.
The poorest six cities, all below $350 annually, are in underdeveloped portions of Africa and Asia.
The U.S. has the highest portion of all government and commercial loans going to mortgages– 43.6 percent. Johannesburg, South Africa, is second, with 39 percent of its loan market going for mortgages.
Dar es Salaam, Tanzania, and Algiers, Algeria, have no mortgage market.
Our prosperous northern neighbor, Toronto, has 41.1 square meters of housing floor space per person, whereas our beleaguered southern neighbor, Monterrey, Mexico, has only 8.6 square meters.
Poor cities tend to have the most crowded housing conditions, with the notable exception of Hong Kong. The Chinese city, returned to sovereignty last July after 156 years of British colonial rule, has only 7.1 square meters of housing floor area per person, despite a national per capita income of $11,490.
Malpezzi said the report, which began as a comparison of capital cities, shows Americans have ample reason to feel blessed.
“We have the highest standard of living of any major country and we are, by far, the best-housed. Life is good.”
The report is available from the center, part of the University of Wisconsin-Madison School of Business, 6262 Grainger Hall, 975 University Ave., Madison, WI 53706; or on the center’s Web page: wisc.edu/bschool/re.
