Canada’s housing affordability sees significant ‘deterioration,’ report says
Housing affordability saw a “considerable deterioration” in Canada in the third quarter of 2023, according to a new report from the National Bank of Canada.
The report, which comes after improvements over three consecutive quarters, shows that many homeowners are struggling and others feeling unsure they’ll ever break into the housing market.
The bank pointed to rising interest rates as part of the cause. That, combined with a rebound in home prices, has left the ability to afford a home a more difficult prospect, according to the report.
Kyle Dahms, a National Bank economist who co-authored the report, told Global News in an interview the rebound in prices left him “particularly surprised.”
“One of the reasons why … is the current demographic boom that’s going on in Canada at this time is unprecedented,” he said.
“We haven’t seen this kind of population growth like we currently are and that just adds an additional layer of pressure we’ve seen in some of the major Canadian cities, vacancy rates, approach, essentially some of their lowest levels on record.”
Dahms says that is, in turn, putting pressure on the rental market, which then “overflows” into the housing market and the demand for housing, further pushing up prices.
In addition, the report notes while rising interest rates and increasing home prices could be considered “perplexing,” the lack of supply in the resale market compounded with the record population growth allowed prices to rise.
Last week after the Bank of Canada held its key interest rate, senior deputy governor Carolyn Rogers told reporters home price drops driven by the recent hikes to interest rates weren’t as steep as monetary policymakers would usually expect, thanks largely to a “structural” lack
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