- Homeownership costs reach 90.3 percent of median income
- Royal Bank index shows affordability at fresh record lows
Vancouver homeownership costs now eat up a record nine out of every 10 dollars of a typical family’s income. If you have to ask about upgrading from a condominium to a single-family home, you really can’t afford it.
The bill for costs including mortgage payments, property taxes and utilities in Canada’s third-largest metropolitan area has climbed to 90.3 percent of the city’s median household income before taxes, according to an index published Tuesday by Royal Bank of Canada, the country’s biggest lender. The figure rose 6.1 points in the second quarter and by 18.3 points from a year earlier.
The West Coast city is the focus of concern about a crash, with prices surging well past C$1 million ($765,000) on steady job growth and the lowest mortgage rates in decades, as well as a constrained supply of land for new properties. The provincial government set a 15 percent tax on foreign home buyers that took effect this month, following several rounds of federal government action to tighten lending standards.
“Clearly, owning a single-detached property at current prices in Vancouver is a luxury that very few locals can afford,” said the report by Royal Bank economists Craig Wright and Robert Hogue. The index for those properties rose to 126.8 in the second quarter, up 9.1 points from the first quarter and 28.9 points over the last year.
The deterioration in home affordability in Vancouver over the last six months is the worst in 26 years, according to the report. Higher index readings mean housing is less affordable.
It’s not just Vancouver. In Toronto, Canada’s largest city, the index for all properties rose to the highest since the third quarter of 1990, climbing 2.1 points to 60.2 percent. Those gains pushed the national index up by the most in six years, climbing 1.2 points to 42.8 percent.