Housing affordability in Canada has fallen to its lowest level in 31 years, according to a new report from RBC Economics.
The report states that aggregate home ownership costs across Canada rose to 47.5% of median household income in this year’s third quarter. That was an increase of two percentage points from this year’s second quarter and marked a nearly six percentage point increase compared to the same period of last year (2020).
RBC Economics includes factors such as mortgage payments, property taxes and utilities to measure home ownership costs.
Vancouver was found to have the least affordable housing market, as ownership costs accounted for 64.3% of median household income in the third quarter, up 0.9 percentage points from the previous quarter.
In Toronto, the proportion rose to 61.9%, up 2.7 percentage points from the second quarter, which represented the most significant deterioration in affordability of all markets tracked by RBC Economics.
The report said the outlook for homebuyers is “grim,” particularly as the Bank of Canada sets the stage for interest rate hikes next year. The central bank's most recent formal messaging has been that conditions are likely going to be conducive for raising interest rates in coming months.
Only one city in Canada managed to buck the trend in the third quarter with housing affordability unchanged in St. John's, Newfoundland, where home ownership costs account for 22% of median household income.
