According to the latest RBC Economics Housing Trends and Affordability Report, 2019’s first quarter saw housing affordability improvement for the second straight quarter in Canada. Rising household income contributed to improved affordability, while modest price dropped in Atlantic and Western Canada.
The report states that the affordability improvement can be traced to “policy-engineered market downturns” that have helped lower property values in a number of Canadian markets.
Although Toronto and Vancouver aren’t near the levels that ordinary Canadian households can afford, RBC Senior Economist, Robert Hogue, suggests that policy makers should be encouraged at the overall progress toward repairing home affordability across the country.
“There’s a high proportion of ownership-capable families in Canada’s most affordable markets—Saint John, St. John’s, Regina, Québec City and Halifax,” said Hogue. “However, only one in eight families earn 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 national aggregate affordability measure, which is calculated as a share household income, declined by 0.3 percentage points to 51.4 per cent in the first quarter of 2019, according to the report.
With interest rates no longer poised to increase, RBC expects a slight improvement to Canada’s overall housing affordability picture in the near term.
RBC suggests that as Toronto’s housing market continues to rebound, any improvement is likely to be incremental.
Toronto home ownership remains elusive for most buyers
The bar to home ownership remains as high as ever in Toronto. RBC’s aggregate measure for the area was 66 per cent in the first quarter. With prices heading in a modest upward trajectory, RBC sees little prospects for meaningful improvement in the near term.
Montréal housing activity remains on an upward trend
Home resales in Montréal were up seven per cent from a year ago in the first five months of 2019. While the city remains much more affordable than Toronto and Vancouver, home ownership isn’t inexpensive. RBC’s aggregate affordability measure, at 44.3 per cent in the first quarter, is near a decade-high point.
Vancouver affordability improves but still at crisis levels
Despite Vancouver resale activity ending its steep slide this past spring, housing affordability remains at crisis levels for the area. RBC’s aggregate measure eased for a third-straight time in the first quarter, down 1.9 percentage points to 82.0 per cent. According to the report, this will continue to weigh heavily on homebuyer demand for the foreseeable future.