Search

RBC Says Housing in Toronto and Vancouver "Dangerously Unaffordable"

homelifegalaxyreal
Mar 2, 2016
2 min read

According to the Royal Bank of Canada housing affordability measure, housing in Canada remains affordable except for those who want to purchase a single family detached home in Toronto or Vancouver.

Economists from Royal Bank indicate that housing is approaching the "dangerously unaffordable" level in these two cities. This scenario will likely continue as long as the demand for single family homes exceed supply.

However, the RBC housing affordabiltity indicate that levels of affordability are improving or well-balanced in every other market, which has been expanded to look at 14 urban markets in Canada.

RBC chief economist, Craig Wright says that in most markets, the price increases of homes are moderate where double-digit gains are not seen like they are in Toronto and Vancouver. He also stated that as long as income keeps growing and there are moderate increases in prices of homes, the affordability will improve.

RBC predicts it will take 109 per cent of a household's disposable cash to afford the full cost of owning a single, detached home including mortgage, taxes and utilities. This prediction is for a household with a 25-year mortgage and average income.

Low interests rates and a good job market have combined to keep demand high but affordability is moving closer to risky levels in Toronto. It takes 71.4 per cent of the average household income to afford the cost of a single family home in Toronto. Condo units remain affordable in Vancouver and Toronto although the prices are also rising, it is at as slower rate than detached homes.

The cost of carrying a home in other cities as a percentage of disposable income:

Victoria, 52.3 per cent

Calgary, 38.3 per cent

Edmonton, 33.7 per cent

Saskatoon, 35.2 per cent

Regina, 29.8 per cent

Winnipeg, 31.6 per cent

Ottawa, 36.5 per cent

Montreal, 42.8 per cent

Quebec City, 34.1 per cent

Saint John, 28.8 per cent

Halifax, 31 per cent