With the city continuing to experience a rapid home price surge, “housing affordability is being crushed” there and “will likely deteriorate” further, says RBC Economics in a new report.
Currently, the prices of detached homes are way above typical earnings, and it’s estimated that the actual price costs up to 119.5% of the average household income calculated this year. This means it has increased to 10% compared to the previous year.
During the 1980’s, prices for a detached house were reasonable and affordable for most working families says RBC. As prices for condos within the Greater Vancouver area continue to skyrocket, they are still below record high, RBS reported.
In their report, it stated that “the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities is based on the average market price” of various dwelling types, and on a 25-percent down payment with a 25-year mortgage loan at a five-year fixed rate.
“Such a pace of appreciation is often symptomatic of expectations of further gains, rather than fundamentals, driving property values to ever dizzying heights,” it added.
“In addition, housing affordability is being crushed in the process.”
RBC stated that prices continue to skyrocket since the first quarter of 2016, and something must be done quickly co regain control.