Photo: James Bombales
As the Canadian housing market continues to adjust to a new mortgage stress test and rising interest rates, affordability is improving across the country. But, according to a new report, a few housing markets seem to be bucking the trend.
According to Desjardins’ most recent Affordability Index, home prices fell across Canadian housing markets last quarter.
“Households’ capacity to purchase a home improved across [the country], since average sales prices declined 5.5 per cent from the previous quarter,” reads the report.
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But not every region saw a bump in affordability. In fact, five Ontario markets saw affordability decrease, as a surge in demand boosted prices.
Affordability deteriorated in Ottawa (-0.7 per cent), Kingston (-6.4 per cent), Kitchener-Cambridge-Waterloo (-7.9 per cent), Windsor (-2.7 per cent), and Thunder Bay (-5.9 per cent) last quarter.
Many are markets that industry watchers had predicted to outperform this spring, as homebuyers sought out more affordable alternatives to expensive markets like Toronto.
“Canadian housing markets are likely to remain under-pressure from the recent [new mortgage rules], higher mortgage rates, and in some cases provincial regulation,” writes TD senior economist Michael Dolega, in a recent note. “However, lower-priced markets where affordability is good should generally outperform in the current environment.”
Ottawa in particular has been named a market to watch, as sales continue to rise month after month. Ottawa home prices jumped 8 per cent year-over-year in March, with the average price of a low-rise home and condo coming in at $447,600 and $275,600, respectively, according to data from the Ottawa Real Estate Board.
And according to BMO senior economist Sal Guatieri, both cities are being bolstered by a rise in Millennial demand, as young buyers seek out more affordable markets for their first home purchase.
“We expect Millennials to bolster other markets like…Ottawa, as those looking for better affordability consider options beyond Toronto and Vancouver,” he writes in a recent note.