“The significant loss of affordability during the pandemic has shrunk the pool of homebuyers in Canada,” said RBC Economist and report author Robert Hogue.
“The situation is particularly tense in Vancouver, Victoria and Toronto where the costs of owning a home are sky-high. Ottawa, Montreal and Halifax also face challenging affordability conditions.”
According to the report, the number of people who can afford a condo or single-family home varies across the country. Between 70 to 80 percent of people in Manitoba, Newfoundland and Labrador, Alberta, and Saskatchewan could afford a modest condo. That number was slightly above 50 percent in provinces like Nova Scotia and Quebec, and far below it in Ontario and B.C.
When it comes to owning a single-family home, the percentage who could afford it sits at around 10 percent in B.C. and 22 percent in Ontario. Meanwhile, the number sits at close to 60 percent in Manitoba, Saskatchewan, New Brunswick, and Newfoundland and Labrador, and closer to 50 percent in Alberta, Prince Edward Island, Nova Scotia and Quebec.
“All markets we track saw their affordability measures rise in the third quarter. Vancouver and Toronto recorded the biggest increases,” the report said.
Mr. Hogue predicts buyers will need to contend with “extremely difficult” market conditions for a while longer, with resale activity lower in the pricier provinces of B.C. and Ontario. However, with expectations that the Bank of Canada will cut interest rates in 2024, the report says there could be price declines in housing across Canada.
The Bank of Canada has raised its benchmark interest rate 10 times since early 2022 to tame rising inflation, but has indicated it will keep them steady at five percent for the time being.
The report said the current trends show the housing stock will increase from about 16 million in 2019 to over 18.6 million by 2030 for Canada, but 22 million units are needed to achieve affordability.
