Demographia International report ranks Vancouver as the world's least affordable housing market. (Associated Press)

Vancouver had the world's least affordable housing market last year, according to a report that puts the blame on urban land-use policies designed to prevent sprawl.

The Demographia International report released Monday looked at 272 metropolitan markets in Canada, the U.S., the U.K., Australia, New Zealand and Ireland.

Four of the five least affordable cities in Canada were in B.C.: Vancouver, Victoria, Abbotsford and Kelowna. Toronto was the country's fifth least affordable and ranked 57th in the world.

As defined by the report, housing had been affordable in these cities as recently as the late 1990s.

The five most affordable Canadian cities were Thunder Bay and Windsor in Ontario, Moncton, N.B., Saguenay, Que., and Saint John.

The report includes an introduction by Tony Recsei, president of the Australian group, Save Our Suburbs, and calls on governments to allow more housing to be built on the fringes of urban areas.

Savings in sprawl, report says

"There is a view among urban planners that we have got to stop the expanse of the city," said American Wendell Cox, who wrote the report with Hugh Pavletich of New Zealand. "They have a pejorative term — sprawl. It is a synonym, as far as they're concerned, for sin.

"It is very difficult to develop new housing on the fringe. Fringe housing on cheap land has been the secret of the expansion of home ownership," he said.

The authors made their rankings by taking the median residential house values from the third quarter of 2009 and dividing it by median annual gross household incomes. The four categories include severely unaffordable, seriously unaffordable, moderately unaffordable and affordable.

Only Vancouver and Toronto fell into the severely unaffordable market in Canada. Montreal, Edmonton and Calgary are classified as being seriously unaffordable, and Winnipeg crept from affordable to moderately unaffordable.

The most affordable major market in Canada was Ottawa.

Incomplete picture, critic says

Not everyone agrees with the report.

Brent Gilmour, acting CEO of the Canadian Urban Institute, said the report oversimplifies other factors that affect housing affordability, such as regional real estate markets and economic conditions.

The report also fails to include the financial, social and environmental benefits of "smart" urban planning. They include lower infrastructure costs, reducing the need for long commutes and cities designed for people who don't or can't drive cars, he said.

"You have to look at the quality of life in a neighbourhood. The ability to walk, to bicycle. Are there parks and recreational facilities that are nearby?" Gilmour said from Toronto. "This study doesn't take into consideration any of those things."

Gilmour said major Canadian cities look at the return on investment when planning new residential areas. Conventional planning based on large subdivision blocks that require more roads, more sewers and more lighting have long-term costs that may not be reflected in the price of a house.

With files from The Canadian Press