Rising prices in Vancouver and Toronto pushed housing affordability closer to "risky levels" in the second quarter of 2015, according to a report from RBC.
Lack of affordability in Vancouver is at a record level, according to RBC's quarterly housing affordability report released Monday. It is approaching 1990 levels in Toronto, it says.
In the rest of the country, housing affordability remains largely unchanged and homes have become slightly more affordable in parts of Quebec and Atlantic Canada, according to the report.
The affordability of single-family detached homes is particularly poor in Vancouver and Toronto, RBC said. (CBC)
The bank warns house hunters in Vancouver and Toronto to expect more of the same later this year, with the supply of homes remaining limited and prices in "acceleration mode."
The problem is particularly acute for detached single-family homes, as demand continues to be high despite the rising prices.
Vancouver's hot housing market shows no signs of slowing, the report said.
"The fact that Vancouver's affordability readings approach all-time highs for any market in Canada — albeit more so for single detached homes than condos — exerts little restraining effect on homebuyer demand at this stage. Given the current high degree of tightness in the market, further price acceleration and affordability deterioration are likely in the near future."
Toronto is seeing double-digit price increases and huge demand, pushing it "closer to risky levels," the housing report said.
"Affordability in Toronto is moving ever closer to the historically poor levels that prevailed in 1990, which may signal that risks are mounting because those were associated with a housing bubble at the time," it said.
A strong labour market, a steady inflow of migrants and low interest rates are keeping the market buoyant for now.
RBC estimates about 80 per cent of the pre-tax median household income is needed to carry a mortgage in Vancouver at current prices and just under 60 per cent for housing in Toronto.