Vancouver House Prices Still Not Affordable: RBC

Jennifer Harrison
March 7, 2012

Despite registering the country's most significant reductions in home-ownership costs in the final stretch of 2011, B.C.'s housing market remained the priciest in Canada, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.

"Steady job creation, which spurred income gains and a further reversal of earlier significant spikes in home prices, alleviated a small amount of pressure on homebuyers in the province, but just barely," said Robert Hogue, RBC senior economist.

"The housing affordability picture in B.C. remains quite poor due mainly to sky-high prices in the Vancouver area, and we expect this will continue to weigh on housing demand in the coming year."

RBC's housing measures capture the province's proportion of pre-tax household income that would be needed to service the costs of owning a home at market values. In the fourth quarter, measures for B.C. dropped across all housing types (a decrease represents an improvement in affordability).

RBC's measure for the benchmark detached bungalow in B.C. dropped by 2.5 percentage points to 67.7% (compared with the national average of 42.2%). The measure for the standard condominium apartment in the province declined by 1.3 points to 35.0% (compared with 28.5% nationally), while the standard two-storey home edged down by 0.7 points to 74.3% (compared with 48.1% nationally).

The measure for detached bungalows in the Vancouver area dropped 4.6 points to 86%. The measures for standard two-storey homes declined 2.0 points to 92.3%, while the standard for condominium apartments declined by 2.4 points to 44.8%.

"While affordability in the Vancouver area housing market continued to reverse some of the earlier sizable deterioration, owning a home at current prices would still take up the lion's share of a typical household budget," said Hogue.

"The ownership bar therefore remains extremely high in the area."