Canada’s homes too expensive

The Canadian housing market is less affordable than it has been in the last 25 years, finds Desjardins Group Economic Studies. This decline stems from average home prices outpacing household income, as well as a small hike in mortgage rates.

Read: When non-residents own real estate Home sales, which plummeted after the new federal government rules came into effect in summer 2012, have started to trend upward in the last few months. Rising mortgage rates during the summer hurried buyers; many took action out of fear that mortgage rates would climb even higher. Even if the coming months bring more increases; they won’t be enough to trigger a significant dip in affordability, say Desjardins economists. However, the housing market should stabilize soon. Rising prices should eventually start cooling buyer enthusiasm.

Most markets are still affordable in Ontario, but Toronto is an exception, where the average home price is $527,821. Meanwhile, the average home price in Calgary is $438,793 in Q3. The sharp rise in average household income, which now surpasses $110,000, makes home purchases easier.

Read: Low-rise home prices climb Meanwhile, Sherbrooke, QC, and Quebec City rank alongside Vancouver as some of the least affordable agglomerations in the country. Even though housing prices are much lower than on the west coast, incomes in these two Quebec cities are considerably lower, making home purchases more difficult.

But there’s some good news for residents of Quebec. “While housing prices continue their ascent in Canada, they seem to be stabilizing in Quebec,” says Hélène Bégin, Desjardins Group senior economist.

Read: Home sales up last month

Home price remained stable in Quebec City, while prices in Montreal are edging down. Meanwhile, prices continued to climb in Gatineau, Sherbrooke, Saguenay and Trois-Rivières, and affordability deteriorated.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.