“The significant rise in homeownership costs in Vancouver and Toronto had a dominant influence on Canada-wide affordability measures in the fourth quarter of 2015,” said Craig Wright, RBC Chief Economist. “While prices continue to escalate in Vancouver and Toronto markets, there are few signs that housing affordability is problematic elsewhere in Canada.”
Even in Toronto and Vancouver there is some hope though for buyers as the unaffordability of single-family detached homes dominates the data while condos are “still within reach.”
For those calling for a correction in the priciest markets, the RBC economists do not see that in the near term: “Recent changes to mortgage insurance rules aimed at cooling high-priced markets may slow down price increases at the margin but we do not believe they will materially reverse current momentum,” Wright commented.
The housing affordability situation is much more constructive elsewhere in Canada, the report notes. Price rises are expected to be slower in most markets and in some, such as Calgary, price decline will aid affordability.
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For most of Canada the housing market is still affordable but in the two hottest markets the situation is worse than ever. The latest assessment of the country’s housing market by RBC shows that in most markets the affordability of homes is stable or has improved but in Vancouver and Toronto the situation is “deteriorating.”