TORONTO – The latest report on housing trends and affordability from RBC Economics Research says owning a home in Canada is less affordable now than at any time in nearly eight years.
The report shows that a dip in home resale activity could not stop further declines in affordability in all markets across Canada during the third quarter of 2016, with the average affordability measure set at 44.3 per cent.
The measure shows the proportion of pre-tax household income that would be required to service the cost of mortgage payments, property taxes and utilities based on the average market price of single-family detached homes and apartments.
The RBC report also shows that for the first time in almost two years, Greater Toronto pushed the Vancouver area from top spot as the city with the most significant erosion in affordability.
However, Metro Vancouver remains the market with the steepest ownership costs as a share of household income.
The report says home ownership for detached homes climbed to 92 per cent of household income in the third quarter, the highest ever reached anywhere in the country since RBC began compiling housing affordability statistics in the mid-1980s.
Home prices also increased in the Victoria area over the third quarter as some of the sizzle from Vancouver’s market seeped westward.
RBC chief economist Craig Wright says in a news release that the third quarter could be a turning point toward improving affordability in the Vancouver area as the price for detached homes eases, but he believes future trends are murky.
“New mortgage insurance rules may help affordability over time, but 2017 is likely to see a tug of war between these market-cooling policy measures and rising longer-term interest rates, pulling affordability in opposite directions. The net effect of this on the costs of owning a home is unclear at this point,” he says.