beijing-toronto-vancouver-condos Photo: Nikolaj Potanin/Flickr

Few, if any, would call Toronto or Vancouver beacons of housing affordability, but compared to other major cities across the globe, their condo segments are still “relatively” affordable.

That’s one takeaway (and possible silver lining) you’ll find in a National Bank research note, published this week.

“A comparison of price-to-income multiples of comparable condos in major city centres worldwide shows these two markets [are] still relatively affordable,” reads the note, authored by National Bank economists Matthieu Arseneau and Kyle Dahms.

National Bank studied the average prices of 90-square-metre (970-square-foot) condos in 18 large markets worldwide, as well as the average family income in these cities, to demonstrate relative affordability.

The bank shows how many times the average local income a particular city’s condo unit costs, and the three select Canadian cities were among the five most affordable markets for “downtown living” by this measure.

housing-affordability-national-bank Chart: National Bank

The most expensive markets were Hong Kong and Beijing, where the specified condos cost 34.7 times the average family income, and London was a close second at 33.6 times.

Vancouver was least affordable Canadian city included on the list, yet fifth most affordable of all. It placed just behind Sydney (11.5) with buyers needing to shell out 11.3 times the average household’s income for a 970-square-foot high-rise home of their own.

Toronto was the third most affordable market on the list, with a rating of 9.4, though it was pricier than Melbourne (7.7), the second most affordable city.

The most affordable market included is Montreal, home to National Bank’s head office, where the sample condo has an average price that is 6.6 times what the average-earning household there takes home in a year.

That’s the good news for those concerned with affordability. The bad? “Vancouver and Toronto homes are less affordable than at any time since the early 1990s,” reads the report.

“These two cities, the main gateways for immigration to Canada… are victims of their success,” it continues, noting booming employment at a time of tight housing supply.

Across 10 major Canadian markets, National Bank tracks quarterly housing affordably by calculating mortgage payments as a percentage of incomes.

vancouver-housing-affordability-q2-2016 Chart: National Bank

Monthly mortgage payments on a median priced dwelling — including condos and single- and semi-detached homes — would drain 73.2 per cent of Vancouver’s median household income ($65,712, as of the second quarter), an increase of 4.4 percentage points from Q1.

Worse yet for buyers whose households are earning around the median income — it’s not anywhere near the qualifying annual income of $150,401. Unsurprisingly, Vancouver, where the Q2 median price of a home was $891,708, was the least affordable market in the second quarter, ahead of Victoria.

National Bank’s math takes monthly mortgage payments on a median-priced home in a given market into account. It assumes a 25-year amortization period and a five-year term.

toronto-housing-affordability-q2 Chart: National Bank

For buyers in Toronto, the third-least-affordable city, mortgage payments on the median-priced home ($652,467) would eat 52 per cent of the $66,932 median income, which is an increase of 2 percentage points from the previous quarter.

“That said, the recent deterioration of affordability has been concentrated in the non-condo segment,” consoles National Bank.

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