It's becoming increasingly difficult for families to own a home in Canada and affordability is only expected to get worse going forward, according to the Royal Bank of Canada.
With house prices continuing to rise, RBC said its affordability index deteriorated in the first quarter of this year — the third quarter that has happened out of the last four — with the deterioration particularly acute in the hot markets of Toronto, Calgary and Vancouver.
The affordability index measures the percentage of pre-tax household income that is needed to service the cost of owning a home at current market prices, including payments for a mortgage, utilities and property taxes. A reading of 50 per cent means service costs swallow up half of a household's pre-tax income.
Nationally, the index rose by 0.1 points to 43.2% for detached bungalows and 0.3 points to 49% for two-storey homes, while the measure for condos dipped 0.1 points to 27.%
But that was an average calculation. Vancouver's affordability index rose 0.9 points to 82.4%; Toronto's by 0.2 points to 56.1% and Calgary's by 0.9 points to 34.5%.
In Ontario as a whole, the affordability measure of 44.9% for bungalows and 51.0 for two-storey homes represented a 24-year high.
Still, the affordability measure has more relevance to newer home buyers since the vast majority of Canadians will have bought their homes in the past, when prices were lower.
