Montreal house-price rise is tops in Canada
But least affordable city in Canada is still Vancouver by far: RBC
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Montreal had the biggest jump in the average price of a two-storey house in Canada during the second quarter, fuelling a deterioration in affordability in a city once known for its cheap real estate, an RBC report said Monday.
Year over year, the price of a 1,500-square-foot home rose 13.5 per cent in Montreal to $377,200 - a higher rate than in Canada's sizzling Vancouver market where prices for the same type of house rose 9.7 per cent during the quarter, the RBC report on housing trends and affordability said.
Yet with the cost of a standard two-storey home now at $843,300 - and with the average price of a detached bungalow rising by nearly 20 per cent year over year - Vancouver is still by far the least affordable city in Canada to buy a home.
"Vancouver is in a class apart," observed RBC senior economist Robert Hogue.
The report measures affordability based on the proportion of median pre-tax household income used to cover the cost of mortgage payments, property taxes and utilities on a home.
In Vancouver, it takes more than 95 per cent of household income to cover the basic costs of a two-storey home, compared with 55 per cent in Montreal, the report said. In Toronto, where it takes 61 per cent of income to buy a two-storey home, the cost of home ownership is becoming less affordable - yet not to the point where it's discouraging buyers.
"We don't see Toronto in a dangerous zone," Hogue said.
It takes just over 49 per cent of household income to buy an average-priced two-storey home in Canada, which rose five per cent, year over year, to $393,100.
In Quebec, the average price of a two-storey home, while still comparatively low, rose 10 per cent to $291,100, year over year, during the quarter - a higher rate than in any other province.
"The cost of owning a two-storey home in the province is now beginning to pinch households' budget ... and will likely be a factor for restraining homebuyers in the period ahead," the report said.
Yet, even as single-family homes are becoming increasingly out-ofreach for buyers in these cities, the affordability of standard condos - the top choice of first-time buyers - remained fairly stable in Montreal and Toronto, where there is a boom in condo construction.
"The supply is such that it's been fairly easy meeting demand," he said.
During the last quarter, it took 32.8 per cent of household income to buy an average-price condo in Montreal, compared with 34.2 per cent in Toronto.
In previous quarters, it was actually less affordable to buy a condo in Montreal than in Toronto.
The change, Hogue said, is because of a greater deterioration in affordability in the Toronto market and a revision in data from previous years that underestimated median incomes in Montreal.
Hogue said he didn't believe the vast disparity between the affordability of condos versus houses was evidence of overbuilding in either city's condo market, where thousands of units are to be delivered in the next few years.
"At this point, probably not," he said.
"Our understanding is that what's in the pipeline has been sold."
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