After three years of degrading housing affordability in Canada , a measure of relief arrived for prospective home owners, according to the latest RBC Economics Housing Trends and Affordability Report.
The broad-based softening of housing market activity helped lower home ownership costs nearly everywhere in Canada , taking down RBC’s aggregate housing affordability measure by 0.7 percentage points to 51.9 per cent last quarter. This measure is calculated as a share of household income. A lower number means that buying a home is more affordable.
Still, the fourth-quarter relief scarcely made a incision in Vancouver and Toronto where affordability remains at emergency levels. Owning a home in both of these markets, as well as in Victoria and increasingly Montreal , is a huge stretch for ordinary buyers.
Across the rest of the country, however, housing affordability levels are generally within historical norms. The affordability strains present in Canada are still confined to a few but large markets.
The good news is that the dip in ownership costs in the fourth quarter is unlikely to be an aberration.
“We have lowered our profile for future interest rates in light of disappointing economic developments since the late stages of 2018,” said Craig Wright , Senior Vice-President and Chief Economist, RBC. “Furthermore, we also see very little scope for home prices to increase nationally this year.”
With tight labour markets poised to keep household income growing, the stars are aligning for more affordability relief in the period ahead.