For the first time in almost three years, overall housing affordability actually improved—a little—in 2016’s fourth quarter, but this was not the case for the condominium market.
According to RBC’s Housing Trends and Affordability report released March 30, it was more difficult to afford a condo in the Vancouver area in Q4 than it was a year—or even a quarter—ago. The affordability measure was 46.1% in Q4, which means it took 46.1% of the median household income to cover the cost of owning a condo at market price in the region. This is up 0.2 percentage points compared with Q3 and an increase of 4.8 percentage points year-over-year.
In its report, RBC said this was the seventh consecutive quarterly increase for this measure.
For single-detached homes, affordability eased in the quarter, falling 6.6 percentage points. Year-over-year, however, it represents a 14 percentage-point increase. The city still remains the most expensive in the country by far, with the measure sitting at a staggering 121%, which means the cost of owning a house exceeds what the average family makes. It is also more than double the national average of 49.2%. The second least affordable city was Toronto, with a measure of 77.6% – up 10.3 percentage points year-over-year.
For all home types, the aggregate measure was 84.8%, which was a quarterly decrease of 5.2 percentage points but a year-over-year jump of 7.1%.
RBC said affordability measures assume a 25% down payment and a 25-year mortgage on a five-year fixed rate. It uses current home prices as compiled by Brookfield RPS.