House Affordability Improving in Some Parts of Canada, National Bank Says

The National Bank stated in a new report that there are some places in Canada where housing affordability is improving despite the continuing escalation in prices of homes in the Vancouver and Toronto areas.

The National Bank released the report yesterday. The report indicated that six out of ten markets surveyed showed improvement in affordability. Particularly, the biggest improvements in affordability were seen in Calgary, Montreal and Ottawa-Gatineau.

The National Bank measures affordability based on the percentage of income needed for a monthly mortgage payment on a average-priced home, assuming a 25-year amortization and a five-year term.

In Calgary, the mortgage payment stood at 28.2 per cent of income for the first quarter of 2016, despite being hit hard by the drop in the prices of oil. This number represented a 0.7 percentage point decrease from the last quarter of 2015.

The National Bank said homes in Montreal have become the most affordable in a decade. Montreal housing markets experienced a 0.5 per cent drop in the first quarter of this year from the end of last year. The same statistics was seen in the Ottawa-Gatineau region.

National Bank economists, Matthieu Arseneau and Kyle Dahmns, stated that the Calgary percentage of income needed for a monthly mortgage payment has now reached a record low.

Matthieu Arseneau said the prices of homes in Montreal have not increased much since 2013 but incomes have increased and interest rates are fairly low. He said, Calgary, on the other hand is seeing price declines right now.

The National Bank says Toronto and Vancouver continue to see increasing prices, eliminating affordability. In Vancouver, the percentage of income needed is very close to the top of the range in recent years. In Toronto, that percentage is now at a 20-year high.

Reference: CBC News

http://www.cbc.ca/…/…/house-affordability-national-1.3544721