In its June 22 news release, the Royal Bank of Canada revealed that residential real estate price growth in the two markets accelerated, especially in the single-detached sector.
“[An] epic surge in Vancouver prices pushes RBC's Q1 affordability measure for the Vancouver area to 87.6 per cent, the worst ever recorded anywhere in Canada,” RBC announced in the release.
“In the first quarter, RBC's aggregate measure for housing affordability in Canada rose 0.8 percentage points to 47.1 per cent, the highest level since the second quarter of 2010,” RBC added. “Deterioration in the Canada-wide condo apartment affordability measure was more modest, as it rose 0.4 percentage points to 35.4 per cent.”
“There is no imminent end to this divided picture because home resale activity is very strong in Vancouver and Toronto and demand in both markets exceeds supply by a wide margin,” RBC chief economist Craig Wright said of the findings.
However, the condition in the less burdened cities was markedly different, with prices for all housing types improving in Halifax, Ottawa, Regina, Saskatoon, and Winnipeg during Q1 2016. Saint John in New Brunswick exhibited the most affordable numbers for the same period.
“In sharp contrast, we see balanced conditions in most other markets in Canada, which is likely to keep affordability within reasonable levels,” Wright stated.
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By all measures, Canadian housing affordability worsened during the first quarter of the year, and the situation in the most overheated metropolitan markets of Vancouver and Toronto played a central role in keeping homes out of reach of all but the wealthiest buyers.