Housing affordability hits worst level in 27 years: RBC
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 straight 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 straight 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 at 80.7 per cent, down 2.4 per cent year-on-year. The Toronto area was secondhighest 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.