Buying a 60m2 (650 sqft) apartment exceeds the budget of people who earn the average annual income in the highly skilled service sector in most world cities. In Hong Kong, even those who earn twice the city’s average income would struggle to afford an apartment of that size. House prices have also decoupled from local incomes in London, Paris, Singapore, New York and Tokyo, where price-to-income multiples exceed 10x. Unaffordable housing is often a sign of strong investment demand from abroad, tight zoning and rental market regulations. If investment demand weakens, the risk of a price correction will increase and the long-term appreciation prospects will shrink.

In contrast, housing is affordable in Chicago, Boston, Los Angeles, Milan and Frankfurt, which limits the risk of a price correction in these cities. Due to relatively high incomes, purchasing an apartment is also relatively feasible for residents of San Francisco and most European cities, with the exception of Paris and London.