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Home affordability in Canada worsened in the last quarter of 2019, after three consecutive quarters of improvement, said National Bank in a report on Thursday.

Seasonally adjusted home prices increased 1.8% in the fourth quarter compared to the previous quarter. At the same time, the five-year mortgage rate increased three basis points, and median household income grew 0.4%.

“While mortgage interest rates were essentially unchanged from Q3, income growth was unable to keep pace with the rise in home prices for the urban composite,” the report said.

Only Vancouver saw improved affordability in the quarter: the monthly mortgage payment as a percentage of income exhibited a fourth consecutive decline — something that hasn’t happened since 2008–2009, the report said. Along with Winnipeg, Vancouver saw incomes rise faster than home prices during the quarter.

Affordability in all other markets deteriorated, with the greatest declines coming from Toronto, Hamilton and Ottawa-Gatineau.

In Toronto, for example, the time required to save for a down payment on a representative home at a savings rate of 10% rose more than three months, to 92.4 months. (Toronto’s representative home price is about $881,000.)

While affordability in markets such as Vancouver, Toronto and Hamilton remain concerning, all other markets were either in line with their historical norms or even better, the report said, highlighting the divergence of affordability according to various markets.

In fact, 2019 saw overall improvement in affordability thanks to an 85-basis-point decline in mortgage interest rates and one of the smallest increases in home prices among member countries of the Organization for Economic Cooperation and Development, the report said.

However, further improvements in affordability aren’t expected. National Bank said interest rates will likely level off and home prices likely accelerate given tight supply in the resale market.

For affordability details for all urban centres, see the National Bank housing affordability report.