The impact of a higher stress test appears to have significantly moderated over the past year
Housing affordability in most Canadian markets has significantly improved over the past year despite the general trend of price increases, according to a new analysis by Ratehub.ca.
Comparing the minimum annual income required to buy an average-priced home in Canadian urban markets in May 2022 and May 2023, Ratehub found that homes have become more affordable in eight out of 10 major cities.
IMAGE: Ratehub.ca housing affordability
“At this time last year, mortgage rates (and therefore the stress test) had already started to increase,” said James Laird, co-CEO of Ratehub.ca. “Hence, the dynamic of a far higher stress test year over year has started to disappear.”
Hamilton posted the greatest improvement in affordability over the past year, while Calgary and Halifax were the only urban markets that did not see better affordability.
“This is because Calgary was the only city where the average home price actually increased year over year, with a $13,600 increase,” Laird said. “Halifax had a minimal decline in average home price year over year, decreasing by $9,500.”
However, Laird is anticipating the trend of improving affordability to slow down in the very near future.
“By the end of 2023, we expect affordability to be flat year over year, since both rates and home prices will eventually be close to even when compared year over year,” Laird said.
