Housing affordability across the Canadian market is dropping more quickly than it has in more than 30 years, according to a report from the Royal Bank of Canada.
Every housing category across the entire country dropped in affordability in the second quarter of the year. Before this decrease, the market experienced three previous quarters of lower affordability.
According to RBC, its affordability metric increased 2.7 percent last quarter — the most significant increase in slightly over three decades. As expected, affordability lowered in Canada’s three major markets: Toronto (4.1 percent), Vancouver (3.2 percent) and Ottawa (3.1 percent).
“Overall, affordability is most strained in Vancouver (ownership costs represent 63.5 percent of household income), Toronto (59.1 percent) and Victoria (48.0 percent),” reads the report. “Ottawa (38.5 percent) and Montreal (38.4 percent) are two other markets where RBC’s aggregate measures look historically high.”
Adding further fuel to the affordability crisis, the amount of income Canadians need to put towards housing costs has increased by 3 percent. This brings the national average to 49.7 percent, a percentage well above the long-term average of 43.1 percent. Even cities outside of those markets like Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Saint John, Halifax and St. John’s are well under their average affordability rates.
With housing inventory remaining very tight across the country and prices still skyrocketing, it’s unlikely Canada’s housing affordability issues will be resolved anytime soon.