Money Canadian home ownership costs hit 'multi-decade highs': RBC

16:37  04 july  2018
16:37  04 july  2018 Source:   huffingtonpost.ca

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Home ownership costs in Canada have hit another " multi - decade high " and are the highest they've been since around 1990, Royal Bank of Canada says.

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a sign on the side of a building: A house for sale Hamilton, Ont., May 13, 2017. After improving slightly in the final three months of last year, home affordability and worsened once again at the start of the year, according to Royal Bank of Canada.© Provided by AOL Inc. A house for sale Hamilton, Ont., May 13, 2017. After improving slightly in the final three months of last year, home affordability and worsened once again at the start of the year, according to Royal Bank of Canada.

All the recent housing policy changes have slowed down home sales across Canada, but they've done virtually nothing, at least so far, to help affordability.

After improving slightly in the final three months of last year, home affordability worsened once again at the start of this year, according to Royal Bank of Canada, with housing costs hitting a "multi-decade high."

a close up of a map: Home ownership costs in Canada have hit another © Provided by AOL Inc. Home ownership costs in Canada have hit another "multi-decade high" and are the highest they've been since around 1990, Royal Bank of Canada says.

And it could worsen yet again next week, when the Bank of Canada is widely expected to raise interest rates for the fourth time in a year.

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For example, an affordability reading of 50 per cent means that home ownership costs , including RBC ’s housing affordability measure for the aggregate of all housing types in Canada rose by 0.6 “Recent changes to mortgage insurance rules aimed at cooling high -priced markets may slow down

c. Cambodia Cameroon Canada Cape Verde Central African Republic Chad Chile China Colombia Congo Congo the Costa Rica Cote d\'Ivoire Croatia Cuba Cyprus Czech Republic. Canadian Home Ownership Costs Hit ' Multi - Decade Highs ': RBC .

RBC's latest housing affordability report shows it now takes nearly half of an average pre-tax income -- 48.4 per cent -- to afford an average home in Canada. The increase in housing costs in the first quarter more than wiped out the improvement seen in the three months before.

In Vancouver, home ownership costs hit their highest level on record, yet again; it takes 87.8 per cent of an average income to afford an average home, which RBC describes as "crisis levels."

Things are only slightly better in Toronto (74.2 per cent) but the Toronto area was just one of two cities, along with Winnipeg, to see an improvement in affordability in the first quarter of this year.

"The main reason was that home prices fell enough in both markets to counteract the effect of higher interest rates," the report said.

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The latest report on housing trends and affordability from RBC Economics Research says owning a home in Canada is less affordable now than at any time in nearly eight years.

Ownership costs in Vancouver on the rise again after back-to-back declines. TORONTO, September 29, 2017 - Becoming a home owner in Canada is less affordable now than at any time since 1990 The jury is in: Finalists of 2018 RBC Canadian Painting Competition announced.

In Vancouver, a rebound in house prices added to the pressure of rising interest rates, RBC noted.

But outside those two cities, "the weight of ownership costs generally remains in line with historical norms," the economists wrote.

a close up of a piece of paper© Provided by AOL Inc.

The RBC report comes as the Bank of Canada prepares for an interest rate decision next week. According to rate analysts at CIBC, the markets are pricing in a 90-per-cent chance that the central bank will raise interest rates next week, the fourth rate hike since July of last year.

A Bank of Canada rate hike would mean immediate mortgage rate increases on variable-rate mortgages, as well as on a number of other types of loans, including home equity lines of credit.

Earlier on HuffPost Canada:

  • There's A New Threat Stalking Canada's Homebuyers
  • House Prices In Canada Are Now Under The Control Of Global Forces

"The prospect of more interest rate hikes in the period ahead poses material risk of further affordability erosion in Canada," RBC said.

"The odds of this ultimately occurring will also depend on the degree to which household income increases."

Also on HuffPost:

This article originally appeared on AMP: HuffPost Canada at https://www.huffingtonpost.ca/2018/07/03/housing-affordability-canada-rbc_a_23473768/

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Source: http://ca.pressfrom.com/news/money/-82163-canadian-home-ownership-costs-hit-multi-decade-highs-rbc/

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