Home ownership costs have gone through the roof in Canada, with RBC data showing the average Canadian pays a whopping 63.5% of household pre-tax income. The bank cites high interest rates as the greatest factor for the sky-high costs, which are higher now than they have ever been before in Canada. “A household earning a median income needed to spend a staggering 63.5% of it to cover the costs of owning an average home at market price. That’s up from 61.8% in the third quarter,” said RBC economists on its website. “Soaring interest costs more than offset a slight price relief (0.5%) nationwide.”Lack of affordability was found to be getting worse across all housing markets in the country. Vancouver, Victoria and Toronto have been hit the hardest and Ottawa, Montreal and Halifax aren’t far behind. “Any improvement over the coming year, though, is poised to be modest and leave budget-constrained buyers wanting,” said economists. “The scope for improvement in the year ahead — while sufficient to rekindle some buyers’ enthusiasm — will be small relative to dramatic loss of affordability that occurred during the pandemic.”By 2025, RBC predicts the housing market won’t be any better than it was in mid 2022, which saw demand increase and supply diminish. “Meaningfully restoring affordability will likely take years in many of Canada’s large markets,” the bank said. RBC deemed Calgary to be “Canada’s current housing hotspot,” with rapidly appreciating prices and resale activity and “it’s becoming increasingly hard for many buyers to afford a purchase.”Edmonton, however, remains “generally manageable,” though “conditions (continue to) erode.”
