RBC re­port shows hous­ing own­er­ship costs ris­ing

Calgary Sun - Homes - - Homes - Myke Thomas CALGARYSUN

The lat­est Hous­ing Trends and Af­ford­abil­ity Re­port from RBC Eco­nomic Re­search says the costs of car­ry­ing a home in Canada took, on av­er­age, more than 50 per­cent of house­hold in­come.

“RBC’s af­ford­abil­ity mea­sure hasn’t been this bad since 1990,” write the re­port’s au­thors, Craig Wright, chief econ­o­mist and Robert Hogue, se­nior econ­o­mist. “The own­er­ship costs to carry a home bought in the sec­ond quar­ter of 2018 would have taken up 53.9 per­cent of a typ­i­cal house­hold’s in­come. This is up sharply from 43.2 per­cent three years ago.”

Wright and Hogue point their fin­gers at in­ter­est rates and mort­gage reg­u­la­tions for the rise in own­er­ship costs.

“Mort­gage rates in­creased in each of the past f our quar­ters and ac­counted for the en­tire rise in RBC’s ag­gre­gate mea­sure for Canada over that pe­riod,” they write. “Unaf­ford­abil­ity is off the charts in Van­cou­ver, Toronto and now Vic­to­ria. In­ter­est rates have a big im­pact in these high­priced mar­kets.”

As has been the case for sev­eral years, these mar­kets are skew­ing the na­tional av­er­ages in all cat­e­gories, although af­ford­abil­ity de­te­ri­o­rated in all ma­jor mar­kets.

In Van­cou­ver, the car­ry­ing cost of own­er­ship is 88.4 per­cent, i n Toronto and in Vic­to­ria, 56 per­cent. In com­par­i­son, in Cal­gary car­ry­ing costs took an av­er­age of 43.9 per­cent of house­hold in­come, in Ed­mon­ton 28.4 per­cent, in Ot­tawa 38.6 per­cent and in Mon­treal 44.1 per­cent.

The out­look is for more of the same, says Wright and Hogue.

“We ex­pect the Bank of Canada to pro­ceed with fur­ther rate hikes that will raise its overnight rate from 1.50 per­cent cur­rently to 2.25 per­cent in the first half of 2019. This will keep mort­gage rates un­der up­ward pres­sure and boost own­er­ship costs even more across Canada in the pe­riod ahead.”

Buy­ers can escape the ris­ing rates by pur­chas­ing be­fore the in­crease and lock­ing into a fixed rate.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.