The fourth quarter of 2016 saw Canadian housing costs remain at overheated levels despite the imposition of various federal and provincial measures to address the prevalent issue of home affordability, according to a fresh report released by RBC Economics Research last week.
In the latest edition
of its Housing Trends and Affordability Report, RBC stated that affordability levels for the final quarter of 2016 remained essentially unchanged from Q3.
“Owning a home at market price in Canada still took an abnormally large bite out of household income, but RBC’s aggregate affordability measure was unchanged in the fourth quarter after a string of six quarterly increases,” RBC senior vice-president and chief economist Craig Wright said.
Toronto affordability worsened to 64.6 per cent, from 63.8 per cent in the third quarter.
“Further policy intervention would be wise to cool surging home prices in Toronto, as the market has become disconnected with economic fundamentals,” Wright explained. “The last time affordability in Canada’s largest city was this poor, in 1990, the housing market subsequently fell into a deep and prolonged slump.”
Meanwhile, affordability saw a marked improvement in Vancouver for the first time in over three years, up to 84.8 per cent (from 90.0 per cent in Q3). However, RBC hastened to add that would-be buyers in Vancouver are still labouring under the greatest affordability hurdle in Canada.
As of Q4, the affordability measure stood at 44.2 per cent nationwide. RBC noted that this is the most stressed level of Canadian home prices since late 2008.
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