According to a report by Ratehub.ca, homebuyers in Canada now need a higher income to be able to purchase a house, despite the fact that home sales have risen nationwide in March. Although 41,636 homes were sold across the country, a 1.4% increase from February, this number is still 34.4% lower than what it was in March 2022. Additionally, home prices rose by 2% compared to the beginning of 2023, averaging at $686,371. The Canadian Real Estate Association has reported that high mortgage rates “continue to wipe out any price relief offered by lower home values.”
Ratehub.ca analyzed the minimum annual income required to purchase an average home in major Canadian cities and found that home affordability had worsened in nine out of ten cities surveyed. Canadians now need to earn an additional $5,650 to $21,360 annually depending on the location where they want to purchase a home. Ratehub.ca predicts that this trend will continue to worsen as a result of tightening sellers’ market conditions.
The national stress test and mortgage rates in March last year were 5.25% and 3.14% respectively. They now stand at 7.5% and 5.54%. Vancouver saw the most significant increase in minimum required income of all the cities in Ratehub’s report, with the minimum income required to afford an average home increasing by $21,360 from $200,220 to $221,580. Conversely, Hamilton was the only city where the minimum income required to purchase a home fell this year.
You can see the full Income requirement chart below. Be sure to visit their website to read the full report here.
