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Housing affordability the worst it’s been in 27 years. Here’s a cross-Canada look

A file photo of a home in Toronto.
A file photo of a home in Toronto. Fred Lum/The Globe and Mail via CP

Housing affordability worsened for the eighth consecutive quarter in Canada, making levels the poorest they’ve been since 1990 — that’s 27 years.

READ MORE: Ontario government announces $200M for supportive housing

The worst erosion of affordability was seen in Toronto, where new policies to moderate prices haven’t yet had an impact, a report by RBC Economics found.

The report explained that while affordability is more strained than it has been in decades, there are some signs rising interest rates will help rein in spending.

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“We estimate that this potentially could lift the RBC aggregate affordability measure up by a further 3.5 per cent nationwide,” RBC’s senior economist Craig Wright said in a press release, noting that other factors such as income gains could affect this.

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The least-affordable place to purchase a home remains the Vancouver area, where it worsened after two quarters of improvement.

READ MORE: Bank of Canada boss warns more surprises could be ahead for interest rates

While RBC says affordability is stable outside of Ontario and British Columbia, other markets are dealing with their own housing market battles.

Here’s a look at the state of housing affordability across major Canadian cities:

Vancouver

As the most expensive market in Canada, consumers hoping for a breakthrough in affordability will be disappointed, RBC says.

After seeing some decline in prices, Vancouver home costs increased again.

“Not only are prices on the rise again but interest rates have begun to climb as well,” the report reads. “The prospects for further rate hikes in the period ahead will put growing upward pressure on home ownership costs in Vancouver.”

READ MORE: Vancouver among world’s most expensive real estate market, survey finds

Victoria

Affordability is becoming a real concern for Victoria residents. The city is behind only Vancouver and Toronto when it comes to expensive housing.

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The report says growing prices have led to an almost 23 per cent drop in home resales over the past year.

WATCH: Calgary’s housing market sees sales, prices and inventories rise

Calgary’s housing market sees sales, prices and inventories rise
Calgary’s housing market sees sales, prices and inventories rise

Calgary

Things are relatively good for Calgary, the RBC report states.

“We expect home prices to remain affordable in the short term, although oil-price volatility could affect confidence in the market,” according to Wright.

But the city has hit a “soft patch” when it comes to resale activity this quarter.

READ MORE: These are the homeownership costs Canadians forget about

Regina

Regina’s housing market is stable, but weak, RBC explained, adding that buyers may not have the confidence to purchase homes amid rising unemployment.

“Potential home buyers in Regina simply aren’t biting at this point,” Wright said.

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WATCH: Saskatoon home prices continue to soften

Saskatoon home prices continue to soften
Saskatoon home prices continue to soften
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Winnipeg

Winnipeg is winning when it comes to the housing market, according to RBC.

The city’s home resale market is thriving and expected to break last year’s record-high numbers. The report notes Winnipeg’s job market is also strong.

While the level of sales is adding pressure for prices to increase, the report says “the impact on affordability was contained by gains in household income.”

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Toronto

Sales of homes in the Greater Toronto Area dropped by 44 per cent between April and July, but they still aren’t very affordable, the report noted.

Affordability hit the lowest level ever measured in the city in this report.

“Clearly, home ownership remains out of reach for many would-be buyers in the area,” the report reads.

Although the average selling price has dropped by 20 per cent since April, it is still five per cent higher than a year ago, according to figures released by the Toronto Real Estate Board.

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But, there may be relief ahead.

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“The good news is that we expect some relief to come soon, as downward pressure on prices is poised to lower ownership costs in the months ahead,” Wright said.

Ottawa

Affordability is declining in the country’s capital, but the demand for homes remains high.

“Our National Capital is expected to stay on its strong course in spite of some erosion in affordability in the area,” the senior economist explained.

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Montreal

Montreal is on the right track, both when it comes to affordability and home resales.

“Buyers are more likely to take their cues from a reinvigorated regional economy and strong labour market,” the report explains.

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Halifax

Halifax is seeing an increase in the number of buyers, while the number of homes for sale remains limited — that meant a boost in home prices in the second quarter.

The report notes that interest from consumers may be driven by the increase in the city’s population and reasonable prices.

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READ MORE: Plan to use your RRSP for a down payment on a house? Don’t do it.

St. John’s

St. John’s lagging economy is preventing consumers from buying homes, even though the prices are reasonable, RBC reported.

Currently, the city has an “oversupplied” housing market and high unemployment numbers.

“Given these tough conditions, we aren’t expecting activity or prices to pick up meaningfully any time soon,” Wright said.

— With files from The Canadian Press

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