The housing affordability crisis is showing little sign of easing
The income required to purchase an average-priced home increased in 10 major cities across Canada in June and July, according to new research released by Ratehub.ca.
Rising variable mortgage rates as a result of recent Bank of Canada increases, and a spike in fixed mortgage rates as bond yields crept higher, were the dominant reasons behind that trend, according to Ratehub.ca’s co-CEO James Laird.
“Mortgage rates increased significantly from June to July, which has caused every city we looked at to become less affordable, even though home values were down in some cities. More income is required to qualify for the average home in all 10 cities we looked at, including the four cities where home prices decreased,” he commented.
“Most Canadians can now expect an average stress test of 8% or higher, which is the highest stress test home buyers have ever seen.”
Vancouver had the largest increase in home values between June and July, with a $7,700 jump meaning an additional $8,970 of income is required to purchase an average home in the city.
As a result, the average buyer now needs to earn an eye-watering $244,620 to afford an average property in Vancouver.
Victoria also saw a sizeable increase in the income required to purchase a property there, rising by $6,080 between June and July to $183,380, while despite average home prices falling in Toronto, the income needed to buy a property in the region rose by $5,450 to $235,250.
