TOUGH MARKET
National measure reaches mark not seen since 1990, RBC Economics report says
Housing affordability in Canada fell to worst level since 1990 and Toronto was hardest hit,
Housing affordability in Canada hit the worst level in 27 years in the second quarter of this year, according to a Royal Bank of Canada report.
RBC Economics said in a report Friday that its housing affordability measure for Canada deteriorated for the eighth consecutive quarter. The Toronto area was the hardest hit, where RBC says affordability declined the most compared to the previous year and hit the worst level ever measured in the city.
The Ontario government’s actions in April to cool down the housing market, including a foreign buyer’s tax, did not have an immediate impact on provincial housing prices in the second quarter, RBC said.
“Clearly, home ownership remains out of reach for many would-be buyers in the area,” RBC Economics said in the report.
“The good news is that some relief is on the way. Recent downward pressure on prices is poised to lower ownership costs in the period ahead. The bad news, unfortunately, is that rising interest rates will take some of that relief away.”
Still, the least-affordable place to purchase a home remains the Vancouver area, where affordability worsened after two consecutive quarters of improvement but remains better than a year ago. Outside of British Columbia and Ontario, affordability remains mostly stable, RBC said.
RBC’s housing affordability measure shows the proportion of median pre-tax household income required to service the costs of owning the average home — factoring in both condos and single-family detached homes — including mortgage payments, property taxes and utilities.
The Vancouver area was the least affordable in the latest quarter ended June 30, 2017 at 80.7 per cent, down 2.4 per cent year-on-year. The Toronto area was second-highest at 75.4 per cent, marking an increase of 12.7 per cent.
Victoria came in third at 58.6 per cent, with a year-on-year increase of 7.3 per cent. Across Canada, RBC’s housing affordability measure hit 46.7 per cent in the latest quarter, a level not seen since the end of 1990 and an increase of 3.7 per cent from a year earlier.
Many Prairie markets got some relief, with year-on-year decreases in Regina and Saskatoon to 28.7 per cent and 32.1 per cent, respectively, RBC said. Affordability deteriorated marginally in most of Quebec and the Atlantic region. In Quebec City, RBC’s metric improved slightly to 34 per cent. In the Montreal area, it worsened by 0.8 points to 41.5 per cent. In Saint John and Halifax, RBC’s affordability measure worsened to 24.5 per cent and 32.1 per cent, respectively, while it improved slightly to 27.7 in St. John’s.
Affordability in Edmonton worsened slightly year-on-year to hit 30.3 per cent. In Calgary, however, affordability deteriorated by 1.5 per cent year-on-year to 39.2 per cent.