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Housing Affordability Monitor: 2018 Q4

National Bank Delves into Quarterly Homeownership Economic Trends

House prices continued to decline in Q4 of 2018, finds the latest National Bank Housing Affordability Monitor, with data from the Teranet-National Bank House Price Index.

Published on January 24, 2019, the quarterly economic report assesses homeownership data, national economic research, and house prices across Canada to take a high-level look at the final three months of 2018.

Highlights found by National Bank Deputy Chief Economist Matthieu Arseneau and Economist Kyle Dahms for October, November, and December of 2018 include:

  • Canadian housing affordability deteriorated for a fourteenth consecutive quarter in Q4 2018, posting the largest one quarter deterioration in over a year.
  • The mortgage payment on a representative home as a percentage of income (MPPI) rose 1.4 points after a 0.3-point rise in Q3.
  • Seasonally adjusted home prices increased 0.9% in Q4 from Q3 and the benchmark mortgage rate (5-year term) rose 20 basis points. Median household income rose 0.2% (a tepid 1.7% on a year over year basis).
  • The worst deteriorations in affordability in Q4 were in Victoria (+4.0 points), Toronto (+3.0 points), and Vancouver (+2.2 points).
  • The only markets showing an improvement were Calgary (−0.3 points) and Edmonton (-0.1 points).
  • Countrywide, affordability worsened in both the condo segment (+1.0 point) and the non-condo (+1.8 point) portion.
  • The time required to save for the down payment on a representative home at a savings rate of 10% rose to 340 months in Vancouver, to 102 months in Toronto, and to 34 months in Montreal in Q4 2018. Edmonton and Calgary, on the other hand, experienced declines to 23 and 33 months, respectively.

In Toronto, Arseneau and Dahms found that non-condo ownership was unattainable for most households. While the condo market was comparatively more affordable, even that took a hit in the past year. Home prices for condos were up on a quarter-over-quarter and year-over-year basis.

  • Toronto non-condo representative home price: $902,916
  • Toronto condo representative home price: $536,082

Montreal affordability also declined for both the condo and non-condo segments. The city, however, is still comparatively affordable and the housing market has gotten hotter.

  • Montreal non-condo representative home price: $369,234
  • Montreal condo representative home price: $276,889

Vancouver’s housing affordability deteriorated in the condo sector, as well. The 2018 Q4 report found that a mortgage payment for the non-condo segment now requires more than the totality of the median household pre-tax income to service.

  • Non-condo representative home price: $1,318,768
  • Condo representative home price: $638,842

Find more trends and insights about housing affordability in 2018 Q4 in the full report. View it here: https://housepriceindex.ca/wp-content/uploads/2019/02/NBFM-Housing-Affordability-Monitor-Q4_2018-Eng.pdf.

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