Affordability continues to be a "major vulnerability" in Vancouver's housing market, as the effects of the 15% foreign buyer tax implemented last year seem to be waning, according to RBC's Canadian Housing Health Check. The report, published July 27, measures affordability by examining the cost of home prices as a percentage of household income.
The report found this ratio to be 79% in Vancouver, over 30% higher than the national average of 45.9%. The report states that anything above 45.1% poses a major risk.
This measure is close to the highest level ever recorded in Vancouver, trailing closely behind the late 1980s affordability measure of 90%, when interest rates grew higher than 18%. The Housing Health Check also predicts that housing affordability in Vancouver will not improve in the near or medium-term.
The vulnerability is most concentrated in the single-family home category, although condos are also feeling the effects of the phenomenon.
"Despite further improvements this year, extremely poor affordability is still a major vulnerability," RBC said in the report. "Policy measures to address housing risks have contributed to cooling the market down, although the effect of these measures may be waning."
Another major cause of poor affordability cited in the report is the declining growth in adult population in the city within the last few months. In June 2017, growth was 1.4%, a decline from March 2016's 1.9%.
"Any sustained period of slower-than-usual growth in population could cause some issues for the high levels of housing construction in the area," RBC said.