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.
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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%).
