Vancouver House Prices: RBC Affordability Report Shows City Is Dead Last

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OLYMPIC VILLAGE
A man walks through the Millennium Water development which was the athletes' village during the 2010 Winter Olympics in Vancouver, B.C., on Thursday October 7, 2010. RBC Economics has slammed Vancouver's affordability, calling it the worst in the country. (Darryl Dyck, CP) | CP

Would you spend your whole paycheck on your home? Statistics from RBC Economics show that Vancouver residents are very close to that.

A report released Monday titled "Housing Trends and Affordability" suggests that Vancouver house prices are gobbling up as much as 93 per cent of residents' household income where a standard two-storey home is concerned. Detached bungalows are eating up as much as 91 per cent and condos are taking up as much as 45 per cent.

RBC Economics calculates affordability using the proportion of pre-tax income individuals need to pay the costs of a mortgage, property taxes and utilities at the going market prices.

Toronto was the next-least-affordable city, at 63 per cent for a standard two-storey home and 54.5 per cent for a bungalow. Toronto condos are eating up about 34.8 per cent of their residents' income.

"The Vancouver-area market continued to be, by far, the least affordable in Canada in the second quarter of 2012," the report stated. "RBC’s affordability measures further deteriorated for all housing types in this market to levels that stood very close to the worst on record."

The effect of Vancouver house prices is trickling across the rest of the province; the report ranks affordability as poor overall in B.C., largely a reflection of the biggest city's prices.

Similarly, the report states that national affordability is being exaggerated by Vancouver house prices alone. RBC Economics states that the margin above the national historical average price for detached bungalows would be cut in half if Vancouver prices were excluded.

In Victoria, meanwhile, the amount of income needed to afford a mortgage at market prices is almost half of Vancouver house prices, News1130 reported.

Changes in mortgage insurance rules at the national level could have an additional impact on affordability.

RBC economist Craig Wright was quoted saying that federal changes that limit the length of an insured mortgage to 25 years, along with an erosion in affordability could restrain homebuyer demand moving forward, the Vancouver Sun reported.

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