Photo: Herb Neufeld/Flickr
With home prices reaching record-high levels in Victoria at the end of 2017, the city’s housing affordability continued to worsen, making it the third least affordable market in the country.
In the last quarter of 2017, the average Victoria household spent 61.6 per cent of its pre-tax income on home ownership costs, including mortgage payments, utilities and property taxes, according to RBC’s Housing Affordability Measure report, published this month. The higher the measure, the more difficult it is to afford a home.
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“We saw a lot of interest in the market. Activity has been quite strong and [was] rising in Victoria until recently,” RBC senior economist Robert Hogue tells BuzzBuzzNews.
He also noted that market conditions had tightened in the BC capital.
The average price of a home in Victoria hit $773,200 in Q4 2017, up 12.5 per cent from a year ago.
Greater Vancouver ranked as the least affordable market across the country in Q4 2017 with an aggregate measure of 85.2 per cent — the worst affordability level ever recorded anywhere in Canada. Following Vancouver was the Greater Toronto Area (GTA) with 75.1 per cent.
Although Victoria ranked as the third least affordable market nationwide, its aggregate measure saw larger year-over-year growth than the GTA.
In Q4 2017, Victoria’s measure soared 6.5 per cent year-over-year — the second-largest annual rise out of all Canadian housing markets studied. The GTA’s aggregate measure saw a 6 per cent increase compared to a year ago. Meantime, Greater Vancouver’s affordability measure rose 8.7 per cent year-over-year, the highest in the country.
Hogue says there are a combination of reasons why affordability worsened in Victoria in the final quarter of 2017, including strong demand that’s been met by a lack of listings.
“With tighter market conditions we saw prices rising and, in fact, barely slowing down at the time when Vancouver’s housing market was slowing down,” says Hogue.
Going forward, affordability could improve in Victoria with the implementation of new housing policies in BC. In February, the provincial government announced a new housing plan, which includes a five per cent increase to the existing foreign buyer tax and a new speculation tax.
Hogue says Victoria’s resale activity in March suggests that the plan might be working to curb demand and ultimately improve affordability.
“We do believe what we’ve seen in the month of March probably reflects, to a certain extent, the new measures announced in the BC budget in February. So, it might have pushed some buyers and sellers to the sidelines,” says Hogue.