Rising household income and targeted policy have made housing more affordable in Canada for the second straight quarter, a report from RBC Economics says, though home ownership remains an “impossible obstacle” in certain markets.
RBC’s national aggregate affordability measure, which represents the share of household income required to cover home-ownership costs, declined by 0.3 percentage points to 51.4% in the first quarter of 2019. It’s the first time since 2013 that the measure has declined in consecutive quarters, indicating that affordability is improving.
With interest rates on hold and a solid outlook for household income backed by strong employment numbers, RBC expects housing to become more affordable in the near term. However, the report said improvement will be incremental due to a rebound in Toronto’s housing market.
“There’s a high proportion of ownership-capable families in Canada’s most affordable markets—Saint John, St. John’s, Regina, Quebec City and Halifax,” said RBC senior economist Robert Hogue in a release.
“However, only one in eight families earns the income necessary to manage ownership costs in the Vancouver area, and one in five families in both the Toronto area and Victoria.”
RBC’s measure for Toronto remained near historical highs in the first quarter, with 66% of household income required to cover ownership costs. Housing prices rose modestly again in Toronto to start the year.
In Vancouver, the affordability measure eased for the third straight quarter but is still at 82%.
“Policy-engineered market downturns have succeeded at reversing some of the earlier massive affordability losses in Vancouver and stabilizing the situation in Toronto—though neither market is close to levels that ordinary Canadian households can afford,” the report said.
Montreal’s measure was unchanged from the previous quarter at 44.3%, remaining near a decade high.
In nine of the 14 markets RBC tracks, a majority or near-majority of families would be able to cover home-ownership costs. Downturns in Western Canada and the Atlantic provinces contributed to the aggregate decline, the report said.
Toronto, Montreal and Ottawa (41.1%) were the only markets whose affordability measure didn’t decline.
Here are the home affordability measures for the other markets RBC examined:
- Victoria: 58.6%
- Calgary: 39.7%
- Edmonton: 34.3%
- Saskatoon: 33.2%
- Regina: 29.4%
- Winnipeg: 31.1%
- Saint John: 25.9%
- Halifax: 31.7%
- St. John’s: 27.4%
Read the full RBC report here.