Affordability worsens as prices up in Vancouver, Toronto: RBC
‘ OUT OF REACH’
OTTAWA• The afford ability of a home in Vancouver has hit the worst level ever recorded in Canada following an “epic surge” in house prices in the first quarter, according to Royal Bank of Canada.
In a report Wednesday, the bank said its aggregate affordability measure for a home in Vancouver climbed 6.5 percentage points to 87.6 per cent, while the same measure for a singledetached home in the city climbed 9. 9 percentage points to a whopping 119.5 per cent.
The measure is the proportion of median pre- tax household income required to pay the mortgage, property taxes and utilities based on the average market price.
“Owning a single- detached home at market price in the Vancouver area has become out of reach for all but just a minority of higher- income households,” RBC said in its quarterly examination of housing affordability.
The increase in Vancouver and a smaller gain in Toronto helped drive the national average cost of home ownership higher. Toronto saw the bank’s aggregate affordability measure climb 1.1 percentage points to 60.6 per cent and increase 1.2 percentage points to 71.7 per cent for a single- detached house.
Meanwhile, the increases relative to income were modest in most other areas.
RBC said nationally its aggregate afford ability measure, which includes single detached houses, condominiums and other types of homes, rose by 0.8 percentage points to 47.1 per cent in the first quarter, the highest level since the second quarter of 2010.
The index for single detached house nationally was 52 per cent, up one percentage point.
“Other than in parts of British Columbia and southern Ontario, housing affordability is not a major obstacle to home ownership in Canada,” the bank report said.
RBC noted that Winnipeg, Regina and Saskatoon saw an improvement in affordability for some or all housing categories in the quarter.
Rising home prices in Vancouver and Toronto have raised concern among policy-makers.
The Bank of Canada has warned that housing prices in those two cities are rising at an unsustainable pace that is beyond local economic fundamentals.
Prime Minister Justin Trudeau has also said the federal government is concerned about the cost of housing in Vancouver, but that Ottawa needs to ensure any action it may take doesn’t hurt other markets.