Declining mortgage rates contributed to the best quarter for housing affordability in 10 years, according to National Bank of Canada.
The mortgage payment on a representative home as a percentage of income (MPPI) dropped by 3.6 points in the second quarter of 2019 after falling by 0.7 in Q1, the bank said in its latest Housing Affordability Monitor.
That shift, combined with a 1% drop in seasonally adjusted home prices from Q1 and median household income rising by 1.7%, “meant that all inputs contributed to the improvement in housing affordability” read the report.
Vancouver, Victoria, Toronto and Hamilton saw the biggest improvements in affordability during the quarter, while Calgary is now at its most affordable level on record.
National Bank reported that in Calgary, housing prices declined by 3.5% year-over-year while incomes rose by 1.5%. MPPI was down 2.4 points in the non-condo market and down 1.2 points in the condo market, quarter over quarter. A representative non-condo home in metropolitan Calgary costs $488,252, and a condo costs $258,654, the report said.
Vancouver saw MPPI decline by 8 points in the non-condo market and 4.1 points in the condo market, quarter over quarter. Over the same span, MPPI declined in Toronto by 5.6 and 2.7 points in the non-condo and condo markets, respectively.
But, while affordability improved in Vancouver and Toronto, National Bank noted that “these markets remain unaffordable on a historical basis.”
Read the full report from National Bank of Canada.