Canada’s housing affordability at worst level in decades

VANCOUVER (NEWS 1130) – Housing affordability in this country has hit its worst level in almost 30 years, and Vancouver continues to be the most expensive place in Canada to buy a place.

Canada’s biggest city was the worst-hit this time around, according to Robert Hogue with RBC, which put out the report. “Rapidly rising home prices in the Toronto area, in particular, have had an impact on overall housing affordability in Canada.”

Rising interest rates may push affordability down even further.

“This will further erode housing affordability, unless you’ve got very strong household income gains to offset that, which we think is probably unlikely,” says Hogue.

RBC chief economist Craig Wright says the Vancouver area’s “window of affordability relief has closed.”

Affordability in this city has worsened after two quarterly improvements. The bank’s quarterly index of housing costs rose 2.6 points to 80.7 per cent after two quarters of declines that totaled 5.8 points.

But Wright notes that drop “looks like all the relief buyers will likely get in this cycle.”

RBC’s report says demand is favouring sellers again and home prices are on the rise, adding “Poor affordability in parts of southern Ontario and British Columbia skew the overall picture across the country.”

Hogue tells us rising interest rates may eventually bring prices down as fewer people qualify for a mortgage, but we may have to wait awhile for that to happen.

Metro Vancouver has been Canada’s least-affordable housing market for years.

RBC says it takes nearly 81 per cent of household income to cover the mortgage, taxes and utilities across all types of homes. For single-detached houses, however, it’s about 115 per cent while condos are 46 per cent.

Victoria had Canada’s second-largest increase in the affordability index, after Toronto.