Housing affordability at worst levels in 41 years, Bank of Canada index shows
Housing affordability hit its worst level in more than four decades last quarter, according to the Bank of Canada, as housing prices and mortgage rates pushed higher.
The “significant deterioration” comes as Ottawa pushes a new housing strategy that looks to revamp war-time homebuilding efforts in a bid to restore affordability in the market.
The Bank of Canada’s housing affordability index tracks Canadians’ typical mortgage payments and utility costs as a proportion of their income. The central bank found that in the third quarter, the index reached its highest level — meaning the worst degree of affordability — since the second quarter of 1982.
BMO chief economist Doug Porter said in a note to clients on Wednesday morning that the growth in long-term interest rates over the summer and early fall compounded with a rise in home prices in the market, dealing a “double-whammy” to homeowners and prospective buyers.
A National Bank of Canada report from last month also pointed to a “significant deterioration” in housing affordability last quarter.
The bank’s housing affordability monitor released Nov. 1 noted that Q3 marked a step back from three consecutive quarters of improvement in the index, which erased nearly two-thirds of the gains seen in that time.
High demand from population growth and a “chronic lack of supply” in the housing market offset gains in household income last quarter, National Bank said.
On Tuesday, the federal government confirmed a Global News report that Ottawa plans to reintroduce a catalogue of pre-approved home plans for builders to rapidly expand the available housing stock in the country. It mimics a similar effort from Canada, post-Second World War, to scale up the number of homes available for
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