How much are you paying for a burger?

A study released by UBS bank compares the cost of living in different cities based on the average number of minutes required to work to afford a BigMac at local market prices. At the very top of the results is Tokyo, where average wages mean 10 minutes of work equals one Big Mac. Unfortunately it doesn't look like they included Vancouver in the study (come on guys! we're world class!), but in Toronto the average wage means 14 minutes of work to buy the burger.

Tokyo scored at the top of the survey, which aims to eliminate variables such as exchange rates, even though it is one of the most expensive cities in the world, UBS said in the Prices and Earnings report released Wednesday.

“Wages only become meaningful in relation to prices — that is, what can be bought with the money earned,” it said.
The bank calculated the “weighted net hourly wage in 14 professions” and divided it into the local price of “a globally available product,” for which it chose McDonald's flagship hamburger.

It seems very strange to me that even though they have the highest purchasing power, a graph of Tokyo land prices over the last 20 years looks like this:



What happened there? Maybe there is no fundamental link between real-estate prices and local market earning power. Another example: the price of an average house in Vancouver will get you two average houses in Toronto, but the average income in Toronto is higher than Vancouver. For 2004 statcan says average family income in Toronto was 60,100 while in Vancouver it was 56,200.

Obviously income is not the only factor in local market value, but how much are we betting that future demand will hold if local economic factors don't change dramatically?