Statistics Canada: Vancouver house price is over seven times the annual income

A new study from Statistics Canada sheds more light on how a household’s income does not always accurately reflect their ability to purchase a property in Metro Vancouver.

The study looked at 2018 data and discovered that the median price-to-income ratio (PIR) in the Vancouver property market is 7.4, meaning that the price is more than seven times the annual income.

The highest median PIRs were 17.2 in West Vancouver and 12.2 in Richmond, respectively, while median sale prices were $683,000 (comparable to the regional Metro Vancouver median) and $2.33 million. Purchasers in West Vancouver made twice as much money as buyers in Richmond, but paid more than three times as much for their homes.

“The decoupling of property prices and income in the Vancouver Census Metropolitan Area may signify that wealth, which is not represented in the income measure, plays an important part in the purchase of properties or that higher levels of indebtedness are required to purchase a home,” says teh report. “Additionally, the income measure excludes capital gains and includes only the income reported the year the property was purchased, leaving out all unreported income.”

Furthermore, in Metro Vancouver, the lowest income quintile’s median PIR was significantly higher, at 28.6. In comparison, the lowest income quintile had lower median PIRs of 7.3 in Halifax and 4.4 in Moncton, as the study also looked at Nova Scotia and New Brunswick.

The ratios are lower for the top income quintile — 3.9 for Vancouver, 1.8 for Halifax, and 1.4 for Moncton.

The higher the PIR, the larger the financial burden on the homeowner will be, requiring a higher level of debt or other capital to cover financing.

Another study indicated that over half of the properties in the lowest income quintile in Vancouver, Toronto, and Halifax were owned by people receiving pension income, compared to around a quarter of those in the highest income quintile.

“This suggests that since buyers in the lowest income quintile are older, they may have had additional time to accumulate wealth, which could result in more capital saved for the purchase of their property,” states the analysis, including the possibility that they may have accumulated wealth through the sale of a previous home.

In British Columbia, properties purchased by at least one immigrant had a median PIR that was more than 50% higher (7.3) than those purchased by non-immigrants (4.7). The biggest disparity occurred in the lowest income quintile, where properties bought by at least one immigrant had a PIR of 26.5 compared to 13.1 for non-immigrants. The combined median PIR to BC for all homebuyers was 5.4.

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