Despite a recent marginal improvement in housing affordability, Canada continues to face an ongoing affordability crisis, according to a report by RBC economists. While the Bank of Canada’s pause on rate hikes provided some relief, soaring demand and limited supply persist in many cities. This article explores the key findings of the report, highlighting the challenges faced by middle-income households and the varying affordability situations across different regions.
RBC’s report reveals a slight decline in the affordability measure for ownership costs in the first quarter of 2023, marking the first decrease in nearly three years. However, the report emphasizes that the easing of ownership costs barely makes a dent in reversing the significant loss of affordability since mid-2020. Middle-income households in cities like Vancouver, Victoria, and Toronto still find homeownership an “impossible” dream, while Montreal, Ottawa, and Halifax face affordability challenges to a lesser extent. Despite falling housing prices, the demand-supply imbalance continues to hinder access to affordable homes.
The report provides a regional breakdown of the housing market across Canada’s major cities. While Vancouver’s ownership costs experienced a slight dip, it remains the least affordable market, with an affordability measure of 96.1%. Victoria also saw a small decline but remains the third-least affordable market. Toronto’s affordability measure has seen a 10% increase in the past two years, despite a slight reversal in the last quarter. Ottawa faces challenges with an affordability measure nearing its worst-ever levels, while Calgary, Edmonton, and Regina offer relatively better affordability. In Atlantic Canada, Saint John and Halifax struggle with high ownership costs and limited supply.
RBC’s report highlights concerns about the future trajectory of affordability. While Calgary and Edmonton currently enjoy better affordability conditions, rising resale activity is tightening demand-supply conditions, potentially impacting affordability in these regions. Montreal’s home resales remain below pre-pandemic levels, while Quebec City maintains relatively stable affordability. Saint John and Halifax face significant challenges due to decreased supply and limited new listings. St. John’s, on the other hand, remains relatively affordable. The report warns that despite recent improvements, the overall affordability crisis persists and that additional measures are required to address the widening gap between income levels and housing costs.