32 years needed to afford down payment in Vancouver: National Bank

by Neil Sharma on 11 May 2021

It would take 25 years to save for a down payment of a low-rise Toronto home, says a new report from National Bank.

At a savings rate of 10% on a $183,594 salary, it would take 297 months to achieve the down payment needed for the region’s $1,069,111 house. In fact, 59.7% of the homeowner’s income would go towards mortgage payments. Conversely, to afford the down payment on a $620,291 condo in Toronto, it would take 51 months at a savings rate of 10% on a $125,202 annual salary, and only 34.6% of income would go towards mortgage payments.

Housing prices in Toronto rose by 2.6% on a quarterly basis in Q1-2021, and 11.8% year-over-year, while median household incomes only increased by 1.2%. Moreover, even the Bank of Canada’s decision to plunge interest rates could not offset the surge in housing prices in Canada’s largest metropolitan area.

Montreal

Housing in Canada’s second-largest city is vastly more affordable than it is in Toronto. To afford the down payment on a low-rise home in the city, which averaged $464,684 in the first quarter of the year, it would require 40 months of saving at 10% rate on a salary of $94,760, and mortgage payments would comprise 32.2% of income. To afford a Montreal condo, which averaged $340,610 last quarter, 29 months of saving would be required for a down payment on a salary of $69,459, and mortgage payments would only eat up 23.6% of income.

Aggregate home prices in the city rose by 3.9% in Q1-2021, with condo and non-condo prices increasing by 2.5% and 4.1%, respectively. However, year-over-year, Montreal housing prices surged by 16.3%, but median household income only climbed by 1.3%.

Vancouver

It would take 32 years to save for a down payment at a rate of 10% on a salary of $237,201, considering that the city’s low-rise homes averaged $1,381,274 last quarter. Mortgage payments would also comprise a whopping 78.3% of income.

It would still require 55 months of saving at a salary of $128,364 for a down payment on a condo, which averaged $636,662 in Q1, and the share of income eaten by mortgage payments would be 36.1%.

Calgary

Thirty-three months of saving for a down payment on a $489,195 home would be required at a $99,759 salary. Moreover, mortgage payments as a share of income would be 26.3%. However, only 16 months would be needed at a $50,113 salary to afford a Calgary condo, which averaged $245,744 in the first quarter of the year, and mortgage payments would be 13.2% of income.

Condo prices rose by 1% in Q1, while non-condo prices were nearly twice as high at 1.9%. National Bank noted that Calgary actually became more affordable on a yearly basis.

Edmonton

To afford a $422,555 low-rise home in Alberta’s capital city, 29 months of saving at a rate of 10% on an $86,169 salary is required for a down payment, and mortgage payments would comprise 23.4% of income. On the other hand, only 15 months of saving at a salary of $44,661 is required for a down payment on a $219,009 condo, with mortgage payments not exceeding 12.1% of income.

Home prices in Edmonton only increased by 0.9% because, while low-rise home prices climbed 1.1%, condo prices actually dipped by 0.4%.

Ottawa-Gatineau

To afford the down payment on a low-rise home in the Ottawa-Gatineau area, which averaged $567,313 in Q1, a salary of $114,967 is needed, and it would take 45 months of saving at a rate of 10%. Mortgage payments would comprise 32% of income. To afford a $345,392 condominium would require a 24 months of saving for a down payment at a salary of $70,434, with mortgage payments of 19.5% as a share of income.

National Bank rated Ottawa-Gatineau as third among cities with the biggest prices increases over a quarterly basis and the top city in terms of annual increases. Condos and non-condos in the region increased by 2.2% and 4.3%, respectively, which eroded affordability, especially since median household income only increased by 1%.

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