Sydney has been unseated as the second costliest city in the world in a new survey of housing affordability.

The 2012 Demographia International Housing Affordability Survey has seen Sydney overtaken by Vancouver as the second least affordable housing market globally, with Hong Kong maintaining its top spot.

The survey ranks markets based upon the multiple of the median house price divided by gross annual median household income. Median house prices in Sydney are 9.2 times median household income, while prices in Vancouver are 10.6 times median income.

Hong Kong outpaced other world markets with median proces 12.6 times household income, the highest in the survey's history.

Though Sydney no longer holds the second spot in the survey, the city is still termed "severely unaffordable" by Demographia's measures. Australia also performed poorly nationwide, ranking as the second least affordable national housing market. While Hong Kong outstripped Australia in terms of median house prices compared to household incomes, Demographia claimed Australia had the "most pervasive housing affordability problem" given its abundant land supply.

Ironically, the survey comes as new figures from the Real Estate Institute of Victoria show housing affordability in the state improved over the December quarter. Median house prices remained relatively stable for the quarter, and affordability received a boost from successive interest rate cuts.

"REIV data confirmed that, overall, the median house price has not changed over the last six months; the key factors driving the current market are a combination of lower consumer confidence, a slowing state economy and an increase in supply," REIV chief executive Enzo Raimondo said.