Friday, September 30, 2022

A New Report Shows Just How Wildly Unaffordable Canadian Housing Prices Have Become

Willa Holt - Yesterday -mtlblog

If you're looking to buy a house, now might not be the time. Canada's Office of the Parliamentary Budget Officer (PBO) has published a report showing that a reduction in the average house price since the beginning of this year has done little to improve the market for Canadians across the country.



After a 52% increase in the average house price across Canada brought on by the pandemic, the PBO witnessed a slight decrease of 7% nationwide. But this doesn't mean housing is that much cheaper — the average house price in several cities, including Montreal, is still over 50% higher than what the PBO considers affordable for residents.

In February 2020, the average Canadian house price was $551,100. By February of this year, it had skyrocketed to $839,600, before that 7% decrease brought the price to $777,200 in August of 2022.

Despite the decline and an increase in average household incomes, skyrocketing mortgage rates have "[led] to a significant reduction in the borrowing capacity of Canadian households and a further widening in the house price affordability gap," the PBO says in its report.

“The gap between the national average house price and what an average household could afford has increased from 45% in December 2021 to 67% in August 2022, a jump of 22 percentage points in just eight months," explained PBO Yves Giroux.

His report says it's possible average house prices could continue to decrease. Meanwhile, mortgage rates are expected to continue to increase, potentially further squeezing borrowing capacity as a result.

In other words, the pandemic's significant impact on housing affordability is likely to continue to exert pressure on households.

This article's cover image was used for illustrative purposes only.

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