Rising real estate prices in Vancouver are helping to increase market confidence, but are leading to housing becoming even less affordable, RBC announced May 27.
According to the bank’s Housing Trends and Affordability Report, the percentage of pre-tax income that the average Vancouverite needed to service the costs of owning a home in 2014’s first quarter has increased overall.
The report also said that home resales fell 6.5% in the quarter, which is 8.5% below the ten-year average.
Bungalow owners need to spend 82.4% of their income – an increase of 0.9 percentage points over the previous quarter. Those who own two-storey homes must spend 86.5% of their income, which is up 0.6 percentage points.
The only home type that became more affordable was condos, with owners spending 39.9% of pre-tax income – a 1.0 percentage point dip.
“The upside from current resale levels may be limited given the market’s long-standing poor affordability conditions,” said RBC senior vice-president and chief economist Craig Wright.
“With prices back in growth mode, the improvements we’ve seen in Vancouver's affordability levels over the last two years will be difficult to replicate.”
After Vancouver, Toronto has the second-least affordable housing, at 56.1% of pre-tax income – an increase of 0.2 percentage points, followed by Montreal (38.9%, up 0.1 percentage points, and Ottawa (36.4%, down 0.5 percentage points).
Affordability also fell across the province as a whole. The average British Columbian must spend 68.4% of their income for housing – up 0.9 percentage points compared with Q4 2013.
The index takes into account mortgage payments, utilities and property taxes.
