(Source: The Canadian Press)
Mortgages are eating up less Canadian household income thanks to historically low borrowing rates and a drop in house prices, a trend that is expected to continue in the near term, a new survey suggests.
The Royal Bank said the cost of owning a home went down in the last three months of 2008, after rising steadily since mid-2004. The bank says the biggest factor affecting affordability was falling mortgage rates, which reduced the cost of borrowing, as well as lower house prices. RBC economist Robert Hogue said lower house prices were mostly a factor in Calgary, Edmonton and Vancouver, which have seen prices driven up the most in recent years.
RBC said affordability improved 2.3 to 3.5 percentage points between the final quarters of 2007 and 2008, “with markets in Alberta and British Columbia showing more sizable repair (although this largely reflects the extent of the earlier impairment).” The study showed that Vancouver remained the least affordable city, where it took 70.3 per cent of pre-tax family income to own a bungalow there, compared to 51.3 per cent in Toronto, 42.7 per cent in Calgary, 42.7 per cent in Ottawa and 39.4 per cent in Montreal.
Read full article “House ownership more affordable for Canadians, RBC says” from the Canadian Press (April 17 2009)