The time required to save for the down payment on a home in both cities declined

Canadian housing affordability deteriorated for a 14th consecutive quarter in the fourth quarter of  2018, posting the largest one-quarter deterioration in over a year, according to the Housing Affordability Monitor by the National Bank of Canada.

The mortgage payment on a representative home as a percentage of income (MPPI) rose 1.4 points after a 0.3-point rise in the third quarter, said the report.

But Calgary and Edmonton bucked the trend.

“The only markets showing an improvement were Calgary (−0.3 points) and Edmonton (-0.1 points),” said the report.

In Calgary, the MPPI was 36.6 per cent for non-condo properties and 19.7 per cent for condos in the fourth quarter, representing a quarter-over-quarter decline of 0.3 per cent and 0.4 per cent respectively.

In Edmonton, the MPPI was down 0.1 per cent to 24.2 per cent for non-condos but rose by 0.2 per cent for condos to 13.2 per cent.

housing“Calgary was the only city to show an improvement in the MPPI for both the non-condo (-0.3pp) and condo (-0.4pp) segments despite the 20-bps hike for mortgage rates. Indeed, on an annual basis, the city composite experienced a decrease of 2.2 per cent in housing prices and a +1.4 per cent improvement in income. While Calgary has become more affordable on a relative basis, the slowdown in home prices is indicative of economic woes in the province,” said the report.

“Edmonton was the only other market to post an improvement in affordability for the composite index. While the city did see a deterioration in affordability for condos (+0.2pp), there was an improvement in the non-condo (-0.1pp) segment. As Edmonton remains the most affordable city in the covered markets, the 25 (non-condo) and 14 (condo) months of savings required for the down payment are the lowest amongst its peers. On an annual basis, the MPPI for the composite increased by 0.8-points. That deterioration was much less severe comparatively to our urban composite.”

The report said the time required to save for the down payment on a representative home at a savings rate of 10 per cent rose to 340 months in Vancouver, to 102 months in Toronto, and to 34 months in Montreal in the fourth quarter of 2018. Edmonton and Calgary, on the other hand, experienced declines to 23 and 33 months, respectively.

– Mario Toneguzzi for Calgary’s Business


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