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The Greater Vancouver Area continues to be the country’s least affordable major housing market, but affordability is now deteriorating faster in the Greater Toronto Area, says an RBC report.

As of the third quarter in the Vancouver area, it takes 92 per cent of the median household income to cover mortgage payments, property taxes and utilities on market-priced homes (including condo units), which is how the bank measures housing affordability.

Greater Vancouver’s measure represents a 2.2-percentage-point increase from last year and the highest reading on record for any market. Its 92 per cent reading dwarfs the national average of 44.3 per cent.

“This situation entirely reflects sky high prices for detached homes,” the report states. “Owning a condo apartment in the area remained comparatively more affordable, although the trend has eroded somewhat as well in the past year.”

In Greater Vancouver last month, the average price of a detached home was $1,612,469 while a condo cost $562,160, according to the Real Estate Board of Greater Vancouver.

For the Greater Toronto Area, RBC’s affordability measure has reached 63.7 per cent, up 3 percentage points from a year ago. That’s the greatest increase of any market this quarter, and the GTA’s highest reading since 1990, when it peaked.

The third quarter is the first time in nearly two years that Vancouver wasn’t where affordability was deteriorating at the fastest rate of all 14 large markets RBC covers in its report.

Saint John is the most affordable major market. It has a measure of 25.5 per cent, the result of a year-over-year increase of 0.7 per cent.

There could be relief on the horizon for prospective home buyers feeling the pinch, RBC suggests. Recent mortgage rule changes, including one that means all those applying for insured mortgages will have to qualify at a higher rate, could cool the market.

But in the short term, these rule changes will be a hurdle, especially for first-time buyers.

And there’s another catch. “Any benefits to affordability from the new rules may be overshadowed in longer-term interest rates,” says RBC.

Homeowners paying off their mortgages in Toronto and Vancouver are particularly exposed to rate hikes, the bank points out.

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