It's not getting any easier to buy a home across Canada's top markets
Rising home prices in January increased the income needed to purchase a home in most major Canadian cities, according to a recent study by Ratehub.ca.
The study analyzed month-over-month changes in home prices across 13 major markets and calculated the income required to qualify for a mortgage with a 20% down payment.
Fredericton, New Brunswick was the only city where home prices declined and the required income decreased. In January, the average home price in Fredericton was $338,000, down $2,300 from December. As a result, the annual income required to qualify for a mortgage fell by $450 to approximately $80,850. The monthly mortgage payment in the city dropped by just $12 to $1,775.
These figures are based on a five-year, fixed-rate mortgage at 4.70%. However, under the federal mortgage stress test, borrowers must qualify at a rate two percentage points higher, or 6.70%, which increases the income threshold.
In Calgary, the average home price increased by $700 in January to $573,100, marking the smallest rise among the cities surveyed. This change pushed the required annual income to $126,470, up $120 from December. The monthly mortgage payment also rose marginally by $4 to $3,003.
Edmonton experienced one of the largest increases in home prices. The average price rose by $14,800 to $412,200, leading to a $2,890 increase in the required annual income to $95,150. Monthly mortgage payments increased by $78, reaching $2,160.
Hamilton recorded the most significant rise in home prices among the 13 cities analyzed. The average home price increased by $20,900 to $819,500. As a result, buyers needed an annual income of $174,405, an increase of $4,050 from December. The monthly mortgage payment rose by $110 to $4,294.
The study suggests that rising home prices continue to make it more challenging for prospective buyers to qualify for mortgages in most major Canadian markets. With the federal stress test requiring borrowers to meet higher qualification rates, affordability remains a concern for many households.
What impact do you think these rising costs will have on the Canadian housing market? Share your thoughts in the comments below.
