VANCOUVER – Housing affordability in Greater Vancouver reached a “crisis level” in the first quarter, with additional interest rate hikes expected to take another bite out of Canadian housing affordability in the months to come, says an RBC report
The share of household income required to cover mortgage payments, property taxes and utilities in the Greater Vancouver Area reached a record high of 87.8 per cent in the first quarter, rising 1.5 percentage points from the fourth quarter and up 9.5 per cent from the prior year, reported Canadian Press.
“And things could get worse if — or when — interest rates rise further,” said the report by RBC chief economist Craig Wright and senior economist Robert Hogue.
A cooling in the market may take pressure off prices but it’s unlikely to ease affordability tensions, they wrote.
The cost of home ownership in Victoria was also high at 62.7 per cent, up from 48 per cent in mid-2015.
The Bank of Canada is expected to increase its overnight rate by one percentage point to 2.25 per cent by the first half of 2019.
Growing household income and cooler housing markets in some areas should provide some limited offset.
Nationally, the proportion of income required to pay home ownership costs rose 0.4 percentage points from the fourth quarter to 48.4 per cent.
The move reversed a 0.3 percentage point drop in the fourth quarter.
