A new report says Vancouver has the world’s least affordable housing, and blames land-use policies designed to limit urban 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 and calls on governments to allow more housing to be built on the fringes of urban areas to help keep costs down.

The report also classified Toronto and Montreal as being severely unaffordable, and seriously unaffordable, respectively.

But Vancouver was deemed the most unaffordable market in the world last year when median housing sale values were compared to median household incomes.

"There is a view among urban planners that we have got to stop the expanse of the city," American Wendell Cox, who wrote the report with Hugh Pavletich of New Zealand, said. "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."

But as one real estate expert noted, that may be impossible in a city like Vancouver -- unless prospective buyers enjoy looking at aquatic life.

“Both Toronto and Vancouver have the same issue, which is land that is undevelopable because it is under water,” Tsur Somerville, of Sauder’s Real Estate Foundation of B.C., told CTV News Channel.

The report is also being criticized for failing to include the financial, social and environmental benefits of "smart" urban planning. Those benefits include lower infrastructure costs, reduced commute times and improved public transportation for those who don’t drive.

Brent Gilmour, acting CEO of the Canadian Urban Institute, said the report oversimplifies other factors of home ownership.

"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 told The Canadian Press.

"This study doesn't take into consideration any of those things."

How did Canadian cities fare?

The study made the rankings by the median residential house values from the third quarter of 2009 and dividing it by median annual gross household incomes. Cities were placed into four categories: severely unaffordable, seriously unaffordable, moderately unaffordable and affordable.

Edmonton and Calgary were put in the seriously unaffordable category. Winnipeg was considered moderately unaffordable.

Moncton, Windsor and Thunder Bay were ranked affordable.