Housing affordability declined slightly in Canada in the third quarter, making the Canadian housing market less affordable on average than it has been for the past 25 years.
That’s according to a new study by Desjardins, which shows the average price of a home in the country increased faster than income growth, up 5.3 per cent compared to the same time period last year.
Desjardins calculates its Affordability Index by using the ratio between average household income and income needed to get a mortgage on an average-priced home.
Vancouver remains the country’s least affordable housing market, with the average home costing $820,753.
Ontario is still affordable — Windsor, Ontario, has the country’s most affordable housing market — with the exception of Toronto, where the average price was $568,384.
But Desjardins points out that despite lower affordability in Canada, property sales remain surprisingly strong. In Vancouver, Calgary and Toronto, sales have climbed 18.0 per cent, 13.7 per cent and 4.7 per cent respectively since the beginning of the year.
“Persistently low mortgage rates have given these markets a second wind, resulting in sharp price increases,” Desjardins said. “Thanks to the booming economies in these metropolitan areas, their respective housing markets remain surprisingly strong despite being less affordable.”
Quebec is the only province where where the average home price stagnated and slightly decreased in some places. Desjardins warned, however, that improving affordability in the province does not mean housing activity will pick up.
“Quebec’s weak economic growth and struggling labour market will continue to hold back the housing market,” the bank said.