Canada’s home ownership rate deteriorated the most in 27 years in the first quarter of 2022, marking a fifth straight quarterly deterioration, according to a new National Bank study released Wednesday.
The decline in housing affordability can be partially explained by the increase in the mortgage payment on a representative home as a percentage of income by 4.9%, after a 2.2% increase in the fourth quarter of 2021.
In addition to rising house prices, the study points to a 46 basis point rise in the five-year mortgage rate in the first quarter, the largest quarterly change since 2013.
House prices increased by 5.1% in the first three months of the year compared to the fourth quarter of 2021, while the median household income changed by only 0.8%, according to the National Bank report.
Therefore, some new buyers should devote more than half of their income to paying off their mortgage when purchasing a residence representative of their local market.
For example, a couple in the greater Montreal area to buy a home worth more than $550,000 should save 10% of their income for 51 months for the minimum down payment and 32 months in the case of a condo.