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World's Most Expensive City To Rent Is Not What You May Think It Is

It isn't New York or Hong Kong.

When people think of the world's most expensive cities, places like New York and Hong Kong (and Vancouver) come to mind.

There are lots of ways to measure how difficult it is afford city living. And these cities certainly rank near the top when it comes to the price of real estate alone.

But that doesn't tell the whole story. Many people, particularly in large cities, rent their homes. So sometimes it's better to look at what it costs to rent versus incomes in a given area.

That's precisely what Global Cities Business Alliance (GCBA) has done in a discussion paper on global housing costs that was released this month. The London-based non-profit looked at how much it cost to rent in 15 cities as a portion of net earnings.

And Beijing took the cake.

The cost to rent in the capital of the People's Republic of China took up 122.9 per cent of people's earnings last year. In other words, for every $100 earned, on average, they owed $122.90 in rent.

"Big cities like Beijing are victims of their own success: rapid growth has magnetised workers, but they now need to deliver enough houses so that workers enjoy living there," GCBA CEO Lesley Saville said in a news release.

"The problems facing Beijing are the same as facing other global cities, only more pronounced."

Beijing's rent as a share of net earnings was three to four times higher than what's considered "affordable housing" (30 to 40 per cent of your net income).

The cost to rent in the city has pushed people to outlying areas, forcing commutes that take as long as 104 minutes per round trip, according to the GCBA.

But it has also forced them to live in underground, windowless units with no air conditioning, Reuters reported.

About a fifth of the approximately 7.7 million migrants in Beijing live underground or at their workplaces, said Xinhua, China's state news agency.

What's Canada complaining about?

These numbers ought to seem staggering to Canadians who complain about the high cost of living in certain cities.

In Toronto, for example, renters only spend an average of 23 per cent of their income (~$1,026) on housing and utilities, according to the Canadian Rental Housing Index.

And in Vancouver, they only spend about 24 per cent.

But the cost to buy in these cities tells a different story. The cost of a single-family home took up about 109 per cent of Vancouver incomes at the end of last year, according to Royal Bank of Canada.

Single-detached homes in Toronto, meanwhile, represented about 60.6 per cent of earnings.

While Beijing was the most expensive place to rent when compared with local incomes, San Francisco was top of the list in terms of the cost of renting costs alone, at US$2,824.

Its placement wasn't surprising. Housing costs have skyrocketed in the area amid a booming tech scene in Silicon Valley.

It's so expensive that one man was literally living in a box until he was ordered to vacate.

Saville said that many cities are dealing with housing costs by looking at new funding and financing models.

San Francisco, for example, has an affordable housing bond and trust fund. And Boston has an innovation lab looking at housing solutions, Saville pointed out.

So maybe there's a little perspective for Canadians in this. And perhaps some solutions, too.

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