Affordability in Canadian Housing Market decreases
Housing affordability slides
Canadian home ownership costs have become more expensive for the first time in 18 months: RBC
Home ownership costs in Canada have become more expensive for the first time in six quarters and affordability will continue to deteriorate in the coming months, a study said Wednesday.
Costs have increased across all housing segments, according RBC's quarterly housing affordability report.
Rising house prices and a small increase in mortgage rates were the key reasons, the bank said. Prices in Canada's resale housing market
have jumped 12 per cent on a weighted average basis from last year, according to Canadian Real Estate Association figures released earlier this month.
“Home affordability deteriorated in all provinces and major markets in Canada due to a slight rise in key mortgage rates and appreciation in property values,” said Robert Hogue, RBC's senior economist.
While homeownership has gotten costlier, affordability is still better than it was a year ago, it said.
The bank's housing affordability report tracks the proportion of pretax household income needed to service the costs of owning a home. All types of housing have gotten pricier, with the biggest percentage increases in standard two-storey homes.
Demand in the housing market has outgrown supply since the rebound started last winter, the report said, leading to a much more competitive market and widespread price increases across much of the country.
Housing will likely get pricier in the coming months, it said.
“With such strong momentum in the housing market and the cyclical low in mortgage rates behind us, it seems unlikely that affordability will improve in the near future,” Mr. Hogue said.
“The housing market still faces obstacles, as mortgages have become more difficult to handle for many Canadians amid challenging labour conditions. This is likely to persist until the economic recovery is well established and job creation is sustained next year.”