Housing affordability hits 17-year low: report

Home-ownership costs in the West drive national trend

By John Morrissy, The Ottawa Citizen, January 25, 2008

Years of price gains in Canada’s booming housing market have made owning a home the least affordable it’s been in 17 years, according to a study released yesterday by RBC Economics.

The Study, which examines how much of their income Canadians must put into owning property, says at no points since the fourth quarter of 1990 has average housing affordability dipped so low.

“Housing affordability worsened for the third consecutive quarter in the third quarter of 2007, and our newly developed econometric models are estimating another deterioration in the fourth quarter before an improving trend unfolds this year,” says the report. 

The most recent quarter’s decline was across almost every housing class in every province and every major city.

The results were strongly influenced by western Canadian housing costs.

The share of income going toward house ownership continues to hit record highs across most property classes in Alberta, British Columbia and Saskatchewan.

However, Ottawa buyers had the most spending power of any major Canadian city, even though house prices rose about six per cent last year.