Housing affordability likely to worsen
Posted May 27, 2014 07:05:07 AM.
This article is more than 5 years old.
The Royal Bank says it is becoming increasingly difficult for families to own a home in Canada and that the issue of affordability is likely to get worse.
The bank’s latest affordability measure on home ownership deteriorated in the first quarter of 2014, particularly in the hot markets of Toronto, Calgary and Vancouver.
In Ontario as a whole, the affordability index for bungalows and two-storey homes was at the highest level in 24 years — at 44.9 and 51.0 per cent respectively.
The R-B-C index represents the percentage of pre-tax household income that is needed to service the cost of owning a home at current market prices, including payments for a mortgage, utilities and property taxes.
A reading of 50 per cent means service costs swallow up half of a household’s pre-tax income.
Royal Bank chief economist Craig Wright says although affordability is not threatening the housing market now, it might become a more serious issue if prices continue to accelerate and interest rates start to rise.
