Canada’s potential first-time homebuyers saw no relief in the second quarter of 2018.

National Bank’s Affordability Monitor published Tuesday reveals a continued weakening of affordability, the 12th consecutive quarterly decline.

It shows that the monthly mortgage payment on a representative home as a percentage of income was up 0.2% after a 1.2% rise in Q1. The benchmark mortgage rate (5 year term) was up 0.14 points while median household income rose 0.9% (3.6% annualized).

The report, written by economists Matthieu Arseneau & Kyle Dahms, shows a slight reduction in home prices nationwide quarter-over-quarter (0.1%).

Affordability declined most in Victoria (1.5%), Quebec City (0.8%), Calgary Montreal (0.4%) and Calgary (0.2%) but improved slightly in Toronto and Winnipeg. Vancouver was unchanged.

Condo affordability worsened more than non-condo nationwide (0.7 points vs. 0.2 points).

“Painful environment” for new homebuyers
While home price growth has eased slightly in Toronto and Vancouver, they remain tough markets for first-time buyers.

“Both cities remain a painful environment for new homebuyers and this is unlikely to change in the short term as central banks remain in a tightening mode,” the report says.

A new homebuyer would need to save for 111 months at a saving rate of 10% to afford the down payment on the representative home ($897,747) in Toronto and would require a $160,577 income.

For a condo, this is cut to 45 months of saving for a $512,223 home and an income of $91,620.

In Vancouver, the representative home costs $1,334,406 which would require a $238,681 income. A buyer would need to save 10% for 410 months for their down payment.

For a condo in Vancouver, the income requirement is $115,556 for a $646,043 representative home. The down payment would take 61 months of saving at a rate of 10%.


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