A new study by the Royal Bank of Canada (RBC) claims that housing affordability in Vancouver, Canada's most expensive market, has reached a “crisis level.”
According to the study, the re-acceleration of home prices, coupled with higher interest rates, are driving ownership costs skyward. The cost of buying a home in Vancouver reached its highest levels on record in the first quarter of this year, according to the study by RBC Housing Affordability Measures.
Vancouver residents would need nearly 88% of their household income to buy a single family home, while Toronto residents would need more than 74% of their income to cover the cost, the study concludes. That compares with the Canadian average of about 48% of household income and less than 44% in other major cities such as Montreal and Calgary.
Despite a series of measures introduced by regulators and the Government of British Columbia over the past two years designed to rein in property prices in Vancouver, the benchmark price for a home in Greater Vancouver rose to a record $1.1 million in May, even as sales fell 35% from a year ago, according to the Real Estate Board of Greater Vancouver.
Meanwhile, the Bank of Canada has raised interest rates three times since July 2017 and is widely expected to raise rates again at its policy meeting next week.
