How much do I need to earn per year to afford a house in Canada?

How much do I need to earn per year to afford a house in Canada?

Report of the National Bank of Canada, May 25, 2022.

Toronto's real estate market recorded its highest quarterly affordability deterioration since 1994 in the first quarter of 2022. Home prices rose, up 22.7% year over year and 7.2% during the quarter. Mortgage interest rates rose.

To buy a home in Toronto at an average price of $1,328,277 CAD, a family must earn at least $228,100 CAD per year. Otherwise the mortgage will not be approved.

If you buy a condominium — an apartment, townhouse or cottage, the area around which is common property of all tenants — at an average price of $720,929 CAD, the income of $144,644 CAD per year will suffice.

First installment

If you save 10% of your income per month, it would take you 363 months to save for a down payment to buy a house in Toronto. With a condominium, you have a chance of making it in 64 months.

You don't have to save up that long for a down payment; there are options where you pay less than 20% of the house price, such as just 6.67%. But then you'll pay at least $500 CAD extra every month because insurance is added.

Those who bought a house in the 1970s needed only five years of full-time work, saving money. By 2022, that figure had risen to 17 years of work. Buying a home in Ontario and British Columbia would require saving between 22 and 27 years.

What's going on with housing prices in other Canadian cities?

City and type of housing Average property price, CAD Required annual income, CAD How many months to save 10% for the first installment
Montreal — separate housing 553 095 112 220 51
Montreal — condominium 383 384 78 182 32
Vancouver — separate housing 1 660 074 285 078 452
Vancouver Condominium 709 092 142 357 63
Calgary — separate housing 533 082 108 353 38
Calgary Condominium 245 179 49 998 16
Edmonton — separate housing 445 295 90 807 31
Edmonton Condominium 221 735 45 217 15
Ottawa-Gatineau — separate housing 679 188 136 580 59
Ottawa-Gatineau Condominium 385 923 78 699 27
Quebec — separate housing 356 311 72 661 29
Quebec Condominium 234 770 47 875 19
Winnipeg — separate housing 398 295 81 222 30
Winnipeg Condominium 243 379 49 631 19
Hamilton — Separate Housing 984 348 195 534 97
Hamilton Condominium 688 302 138 341 58
Victoria — separate housing 1 188 394 204 078 382
Victoria — condominium 612 759 123 747 58

As you can see, the largest gap between median income and housing costs is now in Vancouver. The smallest gap is in Edmonton and Calgary.

Buy or rent?

According to the National Bank, buying a condo is less profitable now than renting the same condo in Greater Toronto Area. By renting a two-bedroom condo rather than buying one, you will pay 35.1% less.

Prices have skyrocketed so much that in many cities it is more profitable to rent an apartment than to pay a mortgage. Right now, the monthly mortgage payment is higher than the average rent in Toronto, Vancouver, Montreal, Hamilton, Victoria. It is more profitable to pay a mortgage rather than rent now in Calgary, Edmonton, Ottawa-Gatineau, Quebec City, and Winnipeg.

Global market

The Bank of Canada notes that real estate prices in Canada are not too high when you look at the global market. Some people even before the pandemic were choosing homes in Europe over comparable homes in Canada.

See the table to see which cities in the world are even more expensive to live in. Compared the price per square foot in downtown May 2021.

City Price per square foot, USD
Hong Kong 3 264
Tokyo 1 640
Paris 1 622
London 1 531
New York 1 431
Stockholm 1 096
San Francisco 1 069
Berlin 1 031
Boston 1 011
Sydney 946
Vancouver 946
Seattle 855
Toronto 843
Rome 828
Los Angeles 768
Montreal 654
Ottawa-Gatineau 526
Oakland 505
Miami 417
Edmonton 398

In 2019, Vancouver was fourth place on a similar list.

The sharp rise in prices in recent months occurred not only in Canada. In the ranking of countries by this parameter, it is in sixth place in the world — for the year prices rose by 18.3%. Leading the way is Turkey, where real estate rose in price by 50.2% over the year. It is followed by New Zealand (27.6%), Australia (23.7%), Russia (22.8%) and Hungary (19.5%).

Source
  • #real estate in Canada
  • #real estate market in Canada
  • #housing market in Canada
  • #housing in Canada
  • #house price in Canada
  • #real estate appreciation in Canada
  • #mortgage in Canada
  • #real estate price statistics in Canada