BUSINESS REPORT: Housing affordability to get worse, not better

For sale signs dot East Broadway in Vancouver. Simon Little / CKNW

After a short slump brought on by Toronto’s version of the foreign buyers’ tax, prices have sharply rebounded — just as they did in Vancouver.

And now, with interest rates rising — albeit very slowly — the same Toronto and Vancouver markets are even more sensitive to rate hikes than other cities, according to National Bank Financial.

READ MORE: BUSINESS REPORT: Bank of Canada may pause interest rate increase, for now

That’s even though more stringent regulations could see home prices decline in 2018.

However, fast-rising prices have already had their impact: in the third quarter of last year, affordability in Vancouver deteriorated at the fastest pace since 1994.

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National Bank is expecting mortgage rates to rise about one per cent in 2018, which would normally have little effect on the housing market.

However, given much higher home prices today, especially in Vancouver, the effect of that combined with new mortgage rules could put even more homes out of the reach of potential buyers.

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