Vancouver is one of the world's most unaffordable cities, and we're not far behind, according to a report released yesterday by the Frontier Centre for Public Policy.

Vancouver and Victoria rank No. 1 and No. 8 respectively among 272 international markets in lack of housing affordability, the Winnipeg-based think-tank said in its sixth annual report on the subject.

Among 28 markets in Canada, Vancouver and Victoria take the top two spots, followed by Abbotsford and Kelowna, the report said. All four centres are considered "severely unaffordable."

The study examined 272 metropolitan markets in Canada, the U.S., the United Kingdom, the Republic of Ireland, Australia and New Zealand. Vancouver topped all markets for lack of affordability.

Affordability was calculated by using the median house-sale value in the third quarter of 2009, divided by the median annual gross household income.

The "median multiple" for Canada came in at 3.7, up from 3.5 the previous year.

A ranking of 3.0 or less is deemed to be affordable. Overall, Canada falls within the "moderately unaffordable" group of 3.1 to 4.0. A "severely unaffordable" rating starts at 5.1. Vancouver is 9.3.

Victoria is at 7.9, up from 7.4 the previous year, and is nestled internationally between Wollongong, Australia, at 7.5, and Melbourne, Australia, at 8.0.

Thunder Bay and Windsor, Ont., tied as the most affordable markets in Canada with a rating of 2.2. Internationally, Detroit and South Bend-Mishawaka, Ind., tied as most affordable with 1.6 each.

"The difference, however ... between Canada and the U.S. in terms of house prices came down to the fact, with all due respect, that you had a banking system that was run by bankers and we had a finance sector that was run by cartoon characters," Wendell Cox, a public policy analyst and one of the report's authors, said from St. Louis, Mo. "Our financial system gave loans to people that could not afford them."

The average price of a single-family house in Greater Victoria last month was $651,316, with the median at $555,000. Condominiums had an average price of $345,907 and a median of $289,000, the Victoria Real Estate Board said.

cjwilson@tc.canwest.com