- Toronto's housing affordability eroded further in the fourth quarter of 2016 to worst level since 1990, elevating risks to worrisome levels
- There was at last some relief in Vancouver but it remained the least affordable housing market in Canada by far
- Overall, Canadian affordability is stressed but unchanged from the third quarter
TORONTO, March 30, 2017 /CNW/ - While home ownership costs remained historically elevated in Canada, they levelled out in the fourth quarter of 2016 after climbing steadily for a year and a half, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
"Owning a home at market price in Canada still took an abnormally large bite out of household income, but RBC's aggregate affordability measure was unchanged in the fourth quarter after a string of six quarterly increases," said Craig Wright, senior vice-president and chief economist, RBC.
Housing affordability is calculated as a share of household income. A higher number means housing is less affordable.
The affordability measure stood at 44.2 per cent in Canada -- still the most stressed level since late 2008.
There were minor changes within housing categories at the national level: the affordability measure for single-detached homes fell marginally to 49.2 per cent while the measure for condominium apartments edged up to 35.9 per cent.
Housing affordability deteriorated markedly in Toronto (to 64.6 per cent, from 63.8 per cent in the third quarter) along with other parts of Southern Ontario, and is bound to get worse in these markets.
"Further policy intervention would be wise to cool surging home prices in Toronto, as the market has become disconnected with economic fundamentals," said Wright. "The last time affordability in Canada's largest city was this poor, in 1990, the housing market subsequently fell into a deep and prolonged slump."
Although affordability improved in Vancouver for the first time in more than three years (to 84.8 per cent, from 90.0 per cent in the third quarter), buyers in Vancouver still face the highest affordability hurdle in Canada, by a long shot.
In most Canadian markets outside Southern Ontario and the Vancouver region, fourth quarter affordability levels were close to historical norms. Two exceptions were Calgary, where affordability was better than usual, and Victoria, where the affordability measure was more strained.
More details regarding provincial and regional housing figures can be found in the fact sheet.
About RBC
Royal Bank of Canada is Canada's largest bank, and one of the largest banks in the world, based on market capitalization. We are one of North America's leading diversified financial services companies, and provide personal and commercial banking, wealth management, insurance, investor services and capital markets products and services on a global basis. We have over 80,000 full- and part-time employees who serve more than 16 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 35 other countries. For more information, please visit http://www.rbc.com/.
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SOURCE RBC
Craig Wright, Senior Vice-President and Chief Economist, RBC, 416-974-7457, [email protected]; Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192, [email protected]; Catherine Hudon, RBC Communications, 416-974-5506, [email protected]
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