B.C. housing affordability has eroded for the second consecutive quarter of the year, according to a report released this morning by RBC Economics.
“Housing affordability in British Columbia remained poor and worsening in the most recent quarter,” RBC senior economist Robert Hogue said.
RBC Economics’ analysis looks at the proportion of pre-tax household income needed to service the costs of home ownership at going market values. An increase in the scale indicates a decrease in affordability.
The report noted that the erosion in affordability was worst in Vancouver.
“Affordability measures for the Vancouver area increased between 0.4 percentage points and 2.22 percentage points in the second quarter and are inching ever closer to the worst levels in the annals of Canadian real estate,” Hogue said.
“We expect this intense affordability-related pressure to continue to weigh heavily on the Vancouver market.
The report found that, since a 2011 spike, Vancouver area home resales have fallen steadily. It noted that, year to date, Vancouver resales are down 18% from last year.
“Such weakness in resale activity has significantly loosened market conditions, to the point that sky-high prices in Vancouver have started to wind down in recent months,” Hogue said. He added that the MLS Home Price Index for Vancouver hit a peak in May and has since declined.
Hogue noted that Vancouver’s “extreme unaffordability” skews the numbers for the province.
“In Victoria, for instance,” he said, “the share of income needed to carry the costs of a mortgage at market prices for some housing types is almost half that of Vancouver.”
