A study by Demographia, which examines housing affordability internationally, labeled Vancouver and Toronto as cities where homeownership is simply “impossible.” In Montreal, access to property is “severely unaffordable”.
This text is a translation of an article from CTV News.
David MacDonald, senior economist at the Canadian Center for Policy Alternatives, says the study’s findings are not surprising.
“We’ve been waiting for this for a long time. We haven’t built enough housing, we certainly haven’t had enough government investment in affordable housing for decades,” he said.
The report analyzes average income affordability in 94 major markets across eight countries: Canada, China, Ireland, Australia, New Zealand, Singapore, the United States and the United Kingdom. Each city is classified according to its score median multiple, which is determined by dividing the average housing price in a city by the median gross household income.
A score below three is considered “affordable”; A score between 3.1 and four is considered “moderately unaffordable”; a score between 4.1 and five is considered “seriously unaffordable”; A score between 5.1 and 8.9 is considered “severely unaffordable”; and this year, a new “impossible unaffordable” category was added for cities with a score of nine or higher.
Toronto got a score of 9.3 and ranks 11th on the list of cities where housing is unaffordable, while Vancouver scored 12.3 and ranks third on the list.
“Buying a property at the moment I think is almost out of the question for my partner and I. We just can’t afford it,” said Vancouver resident Aman Fiseha.
The housing shortage is driving up house prices in Canada. According to the Canada Mortgage and Housing Corporation (CMHC), 3.5 million additional housing units would need to be built to restore affordability by 2030. In April, the federal government announced billions of dollars in spending .
However, for people like Mr Fiseha, it may be too late.
“We considered looking at the opportunities available to us in the United States,” he said.
The report highlights that housing costs outpacing income growth are the main cause of the crisis in the countries studied.
In Canada, Edmonton is the cheapest market for purchasing a home and is rated as “moderately unaffordable,” with a score of 3.6.
Calgary is considered “seriously unaffordable” with a score of 4.6, while Ottawa and Montreal are considered “severely unaffordable”, with respective scores of 5.3 and 5.8.
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Tom Storey, sales representative at Royal Lepage, says people need to get a little more creative to access the housing market.
“Some people who are rent controlled and have very good living conditions actually buy an investment property as their first property that they can put on the market. They team up with their friends and family to co-purchase real estate and get it,” he said.
Nearly 90% of the cities surveyed were not classified as “impossible to unaffordable,” but none of the 94 cities scored below three, the threshold at which they are considered “affordable.”
