Winnipeg immune to house cost ‘crisis’

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This article was published 28/12/2018 (2509 days ago), so information in it may no longer be current.

Home ownership costs remain well under control in Winnipeg, but according to RBC’s Housing Trends and Affordability index for the third quarter, housing affordability deteriorated to its worst level in Canada since 1990.

It would have taken 53.9 per cent of a typical household’s income to carry the ownership costs of an average home bought last quarter, averaging out all of the jurisdictions across the country.

But in Winnipeg, which RBC believes is still on course to land softly after reaching sales heights in 2016 and 2017, it only takes about 31 per cent of household income to cover home ownership costs.

That compares to 86.9 per cent in Vancouver and 74.3 per cent in Toronto, where RBC says affordability is at crisis levels.

The national index is up 1.5 per cent from a year ago and the bank blames rising interest rates as the main culprit. Mortgage rates increased for a fifth straight quarter and accounted for the entire rise in RBC’s aggregate measure for Canada over that period.

In Winnipeg, the affordability index was up 0.4 percentage points from the previous quarter, but is still close to the long-run average of 29.5 per cent. The slowdown in activity in the 2018 housing market has been orderly, with demand and supply remaining in balance overall, although the condo segment showed more visible signs of weakness.

The outlook isn’t promising. The bank expects further interest rate hikes will keep upward pressure on ownership costs in 2019. It expects softening prices in Toronto and other key markets and rising household income increases to provide some offset.