- Until very recently, sky-rocketing home prices in Vancouver were the main driver of mounting ownership costs. In the third quarter, it was sharp erosion in the Toronto area that took centre stage.
- Some of the heat from the Vancouver market continued to make its way to Victoria where home prices escalated further
- In Calgary, the level of home resales remained historically weak
TORONTO – Despite cooling home resale activity overall, housing affordability deteriorated further across all markets in Canada in the third quarter of 2016, according to the Housing Trends and Affordability Report issued today by RBC Economics Research.
Owning a home at market price in Canada in the third quarter was the least affordable in nearly eight years. RBC’s aggregate measure for housing affordability in Canada rose for the sixth consecutive quarter by 1.3 percentage points to 44.3 per cent. (An increase in the measure represents a deterioration in affordability.) Single-detached homes once again led the climb (up 1.3 percentage points to 49.4 per cent), followed by condo apartments (up 0.8 percentage points to 35.6 per cent).
For the first time in almost two years, the Vancouver area did not record the most significant erosion in affordability in Canada. That title went to the Greater Toronto Area in the third quarter, where RBC’s aggregate measure jumped by 3.0 percentage points to 63.7 per cent—the highest point since the all-time peak reached in the spring of 1990.
Still, the Vancouver area remained the market with the steepest ownership costs as a share of household income at 92.0 per cent (for the all-housing category aggregate), following a rise of 2.2 percentage points in the third quarter. The latest Vancouver-area aggregate measure also was the highest ever reached anywhere in the country since RBC began compiling housing affordability statistics in the mid-1980s; reflecting sky-high prices for detached homes.
“The third quarter could be a turning point toward improving affordability in the Vancouver area in light of a recent easing in detached home prices, but further deterioration is likely to occur in the near term in Toronto,” said Craig Wright, RBC chief economist. “New mortgage insurance rules may help affordability over time, but 2017 is likely to see a tug of war between these market-cooling policy measures and rising longer-term interest rates, pulling affordability in opposite directions. The net effect of this on the costs of owning a home is unclear at this point.”
More details about provincial and regional housing figures can be found in the fact sheet.
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