Higher home prices, slower income growth and increased utility costs eroded Canada’s housing affordability in the first three months of the year despite lower borrowing costs, Canada’s largest mortgage lender said last week.
Rising ownership costs are making it more difficult for first-time buyers, Royal Bank of Canada economist Allan Seychuk said in releasing the RBC housing affordability index.
While Canadian incomes are rising by one to five per cent annually, housing prices are increasing at two to 12 per cent, Seychuk said in an interview.
That squeeze is overwhelming recent small declines in mortgage rates, he said, notably in Vancouver, Toronto and Montreal.
“House price growth is expected to continue,” although at a slower pace than recent years, he said. “At the same time, mortgage rates are expected to gently rise over 2005, 2006.”
The Canadian Press