While still far and away the priciest housing market in Canada, Vancouver became slightly more affordable in the third quarter, according to a report released this morning by RBC Economics.
For a detached bungalow in Vancouver, RBC’s affordability measure – based on the proportion of median, pre-tax household income homeowners need at current market prices – dropped to 90.6% from 92.1% in the second quarter.
In B.C., that measure dropped to 70.2% from 71%.
RBC found that a slight decline in mortgage rates and softer prices for two-storey homes and condominiums in B.C. drove the slight increase in affordability.
But Robert Hogue, a senior economist with RBC, emphasized the slight increase in affordability hasn’t changed much for Vancouver.
“[Unaffordability] is still at near-record levels; I think there’s no doubt about that,” he said.
“In Vancouver, in particular, the measures hit their highest points – and therefore the least affordable levels – in the previous two quarters. So the improvement is off a really poor starting point.”
RBC’s report found that affordability improved moderately across Canada in the third quarter.
“While the European sovereign-debt crisis in the past several months re-ignited tensions in global financial markets and heightened uncertainty about the world economy, the effect on Canada’s housing market so far might not have been all negative,” the report states.
“In fact, it appears that developments related to the crisis likely provided some benefits in the form of lower interest rates.”
The report found that fixed mortgage rates eased to 5.3% in the third quarter from an average of 5.6% in the second quarter of the year.
Jenny Wagler
@JennyWagler_BIV