This post examines the list of African countries with the highest Price-to-Income ratio of property.
The Price-to-Income ratio (PIR) is the ratio of median house prices to the median household disposable income in percentage or years of income.
This serves as a measure of the affordability of houses in different locations. It is also used by Financial institutions to assess the affordability of homes.
Rising PIR indicates a decline in the affordability of houses. When they decline, it means homes are becoming more affordable. PIR varies inversely with the Affordability index.
A general rule of thumb is that you can afford a house if it’s price is equivalent to 2.6 years of your household income.
Below is a list of the African countries with the highest PIR based on data from Numbeo.
1. Ghana: The West African country has a PIR of 87.65 putting it at not just number one in Africa, but in the world. This gives it a low affordability index of 0.04. The average price of a house in Ghana is $427,000 USD. This is over 80 times the average income in the country.
2. Kenya: The PIR of the East African country is 24.24 putting it second on the list.
3. Algeria: The North African country with a Mediterranean coastline has the third least affordable homes in Africa. The PIR of Algeria is 18.25 meaning homes cost nearly 20 times the average household income.
4. Nigeria: The giant of Africa has a PIR of 16.11 and an affordability index of 0.31.
5. Morocco: The second North African country on this list has a PIR of 12.60.
6. Egypt: The land of the Pharaohs and a thousand Suns has a PIR of 12.04.
7. Tunisia: The North African country has a PIR of 11.75.
8. Mauritius: The island nation on the Eastern coast of Africa has a PIR of 9.71
9. South Africa:The rainbow nation has a PIR of 3.07 making home ownership an affordable prospect compared to other countries on the continent.
Globally, Nigeria has the 31st highest PIR just below Brazil and above El Salvador.
The United Kingdom ranks 83rd with a PIR of 8.86. Canada has a PIR of 7.52 while the USA has a PIR of 3.96.
Despite the high cost of ownership in western countries, the low PIR and high affordability index is an indication of the high wages.