Housing affordability still sliding: Royal Bank
Housing affordability continued to erode steadily across the country in the spring and early summer, Royal Banksaid Wednesday in a quarterly report.
"In the second quarter, Canada's housing affordability experienced one of the largest and most broadly based quarterly deteriorations since the mid-1990s," said Derek Holt, assistant chief economist at the bank.
"Higher house prices, mortgage rates, utilities and property taxes all combined to drive the countrywide deterioration," he said.
In the April-June quarter of the year, the proportion of pre-tax household income required to service the cost of owning a standard condominium rose to 29 per cent from 27.5 per cent in the first three months of the year. A standard townhouse required 33 per cent of income, compared with 31.5 per cent in the previous quarter.
A detached bungalow took 41 per cent of pre-tax income, up from 39 per cent, while a standard two-storey home remained the least affordable housing type at 46 per cent — up from 44 per cent in first quarter.
Saskatchewan, Alberta and British Columbia saw the biggest reductions in housing affordability, the bank said.
Affordability deteriorated by approximately 20 per cent across each of the home segments in Saskatchewan, making it theworst quarterly deterioration on record.
"[Saskatchewan] jumped into the spotlight at the start of the year when an influx of people caught the housing supply off guard, forcing affordability to deteriorate," said Holt. "This momentum continued into the second quarter as the pace of annual price gains soared into the double digit range."
Housing market conditions from Manitoba eastward are relatively stable compared to the western provinces, the bank added.