Canada's housing market sees largest improvement in affordability in four years: National Bank
Canada’s housing market saw the largest improvement in affordability in nearly four years in the first quarter of 2023, according to a report from economists at the National Bank of Canada.
The report analyzes housing affordability in major census metropolitan areas, factoring in the prices of condos and other dwellings, as well as the real estate market as a whole.
It measures affordability by tracking the number of months a median-income household will need to save for the minimum down payment of an average-priced home, if they were to save 10 per cent of their income before tax.
The report states that housing affordability improved across the board in Canada’s 10 major census metropolitan areas in the first quarter — the first time this has happened in all markets in two and a half years.
The largest improvements occurred in Vancouver, which remains the least affordable Canadian city for buying a home, Hamilton and Toronto.
By contrast, Calgary, Edmonton, and Quebec saw the smallest increases in improvement, the report notes.
The average mortgage payment as a percentage of income (MPPI) registered at 60.9 per cent in the first quarter of 2023, down 3.2 points from the previous quarter and 5.4 points from the second quarter of 2022, when Canada’s housing market reached its most unaffordable level in more than 30 years.
The economists note that while the MPPI improved, it remains elevated and has not counteracted the huge rise in unaffordability observed during the COVID-19 pandemic.
Meanwhile, it states that its benchmark five-year fixed rate mortgage used to calculate affordability declined 14 basis points.
Restrictive interest rates, a decrease in home prices and rising incomes were factors that led to the improvement in housing affordability, the report notes.
Looking ahead, National Bank says it’s expecting to see a “slight easing of pressure” on interest rates in the second quarter of 2023.
“That said, a stabilization in home prices is likely given the pickup in activity with sales increasing while listings have moderated,” the report’s authors state.
“However, we have doubts as to whether this price rise will be sustained, given restrictive monetary policy which is contributing to maintaining affordability at a challenging level.”
YOUR FINANCES
opinion | Should you take advantage of the First Home Savings Account?
Personal finance contributor Christopher Liew explains how First Home Savings Accounts work, who’s eligible for the program, and outlines the contribution rules.
opinion | Find out how much contribution room is left in your RESP to avoid penalties
Opening a Registered Education Savings Plan (RESP) is a great way to fund your child’s future education. Personal finance contributor Christopher Liew outlines the contribution rules for RESPs and explains how to find out how much contribution room you have left so that you can avoid penalties.
opinion | Is it a good time to buy a new vehicle?
If you're like many would-be vehicle shoppers, you may be wondering when prices will finally drop. The good news is that the vehicle market seems to be finally stabilizing, says personal finance contributor Christopher Liew.
opinion | How to get the most out of your grocery rebate
Personal finance contributor Christoper Liew shares the latest information about who’s eligible for the grocery rebate, when they can expect their payments, and some helpful tips on making the most of your grocery rebate.
opinion | Dos and don'ts of money while travelling
As a former financial advisor, I’ve always been fascinated by how the 'culture' around money differs from one region of the world to another,' writes personal finance commentator Christopher Liew. 'Today, I’ll outline some of the interesting money habits that I’ve noticed while travelling the globe, starting with some of our own!'
opinion | How much of a raise should you ask for in a time of high inflation?
With the rising cost of food and living expenses, you might be considering asking for a raise. On CTVNews.ca, personal finance contributer Christopher Liew explains how inflation could determine the extent of your raise, as well as other key factors.
opinion | Top sources of passive income for Canadians looking to earn more
On CTVNews.ca, personal finance contributor Christopher Liew explores some of the top sources of passive income in Canada, for those looking to increase their earnings.
Owe money to the CRA? Here are some repayment options
Getting an income tax refund can be a happy bonus for your household budget, but an unexpected tax bill can be an unpleasant surprise, especially if you don't have the cash on hand to pay it.