Low supply helps push up Canada\u2019s new home prices in January<\/a><\/strong>\r\n <\/div>\nIn Vancouver, the length of time needed to save for a home was even longer compared to Toronto. If you\u2019re looking to buy a non-condo home, you\u2019d need to save for 431 months (almost 36 years) for a downpayment and have an annual income of $269,994 to afford the representative price of $1,572,237. This is the highest number of months needed for saving a downpayment compared to the other nine cities NBC analyzed.<\/p>\n
Vancouver condos require 59 months of saving (4.9 years) and $137,442 of annual income to afford the representative condo price, worth $683,650. The MPPI of a non-condo Vancouver home is now 91.9 per cent, up 2.8 per cent quarterly. The MPPI for condos rose 1.2 per cent quarter-to-quarter to 39.9 per cent.<\/p>\n
Victoria reported the highest increases to its MPPI for condo and non-condo homes last quarter, which rose 2.5 per cent and four per cent quarterly to 40 per cent and 76.2 per cent.<\/p>\n
If you were to purchase a non-condo home in Victoria, you\u2019d need an annual take home of $189,846 and to save 358 months (29.8 years) for a down payment to afford the representative home of $1,105,517. By saving for 53 months (4.4 years) with an annual income of $117,551, you could afford a Victoria condo, worth $580,689.<\/p>\n
Rising mortgage rates contribute to declining affordability in Q4-2021<\/h3>\n
NBC noted in its report that increasing mortgage interest rates were the larger driving force behind declining affordability last quarter in addition to home price growth.<\/p>\n
The bank\u2019s five-year benchmark mortgage rate, which is used for its affordability metrics, increased 28 basis points (bps) in Q4-2021, the largest quarterly change since Q3-2017, when the Bank of Canada upped the overnight rate two times during the same quarter.<\/p>\n
\u201cWith investors now anticipating a more rapid increase in policy rates, our benchmark rate has increased by another 30bps in the current quarter for a cumulative 100bps since the 2020Q4 rate trough,\u201d explained the report. \u201cAll else being equal, such an increase would have translated into a 10.7 per cent decline in purchasing power.\u201d<\/p>\n
In the second half of 2021, a record-high portion (53 per cent) of homebuyers opted for variable rate mortgages instead of the standard five-year fixed mortgage. In doing so, NBC said that mortgage holders boosted their purchasing power by 10 per cent in Q4-2021, but this \u201cescape route,\u201d is expected to close as the BoC starts to up its policy rate.<\/p>\n
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