- Toronto's housing affordability deteriorated to its worst ever level in the first
quarter of 2017
- Vancouver continued to see further improvement as Toronto closed the gap on the least affordable market in Canada
- Overall, Canadian affordability continues to be stressed, but outside Ontario and
British Columbia affordability trends are largely stable
TORONTO, June 29, 2017 /CNW/ - Runaway home prices in
Toronto and its surrounding region moved the national housing affordability needle to worrisome
levels in the first quarter of 2017, according to the latest Housing Trends and Affordability
Report issued today by RBC Economics Research.
"Only once since 1990 have Canadian households had to spend this much on ownership costs, clearly underscoring the degree to
which rapidly rising prices have squeezed housing affordability over the past year," said Craig
Wright, senior vice-president and chief economist, RBC.
The affordability measure stood at 45.9 per cent in Canada -- the second-highest level since
1990. Housing affordability is calculated as a share of household income. A higher number means housing is less affordable.
Housing affordability hit record levels in Toronto reaching 72.0 per cent (up from 69.3 per
cent in the fourth quarter) surpassing the previous high of 70.6 per cent in 1990. Several other markets in Southern Ontario also saw rapidly rising homeownership costs related to Toronto's overheating. An influx of buyers coming from the Toronto area in
markets such as Hamilton, St. Catharines and Kitchener-Waterloo drove up prices considerably.
"Toronto's frenzied housing market further strayed from economic fundamentals in the first
quarter," said Wright. "Ontario's Fair Housing plan announced on April
20 should bring some sanity back to the market, though its impact on affordability in the GTA may take up to two or three
quarters to be felt."
In Vancouver, affordability improved for the second-straight quarter (to 79.7 per cent, from
80.9 percent in the fourth quarter). While still the least affordable market in Canada, the
series of policy measures introduced last year to cool the market have had a positive effect.
In most Canadian markets outside of Ontario and British
Columbia, affordability levels remained relatively stable in the first quarter, with slight improvement in many Prairie
markets and marginal deterioration in most of Quebec and the Atlantic region.
While interest rates have played a secondary role in shaping affordability trends recently, indications are that the Bank of
Canada may increase the overnight rate sooner than financial markets expect. As a result,
monetary policy could pose a growing risk for Canada's housing market.
More details regarding provincial and regional housing figures can be found in the fact sheet
.
About RBC
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SOURCE RBC
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