This is how much you need to earn to buy a house in Canada

The housing market in Canada has been a roller-coaster over the past couple of years. Mortgage rates are high, rent is expensive, inflation is increasing, and interest rates are through the roof.

You have bills to pay, money to (hopefully) save, and things to do.

For a lot of Canadians, finances boil down to this: how much money do I need to earn to be able to buy a house?

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A new report by ratehub.ca has highlighted how much you need to earn to buy a home based on which city you live in across the country.

The mortgage broker says home prices have been “softening in markets across Canada in recent months,” but “steep mortgage rates” have prevented any widespread improvement in housing affordability – until now.

According to ratehub.ca’s latest affordability data compilation, home prices have “indeed decreased by a large enough margin to ease qualification for many buyers in October,” specifically with affordability improving in eight of the 10 markets studied.

Mortgage rates rose slightly on a month-over-month basis, with the mortgage stress test hitting a new average high of 8.47%.

“Mortgage rates continued to increase, pushing the stress test to another record high,” says James Laird, co-CEO of ratehub.ca and president of mortgage lender CanWise.

“Home values decreased in eight out of the 10 cities we looked at, such that the amount of income required to qualify for the average home in those markets decreased from September to October.”

To gauge housing affordability conditions, ratehub.ca calculated the minimum annual income required to buy an average home in some of Canada’s major cities based on October 2023 and September 2023 real-estate data. The report illustrates how changing mortgage rates, stress-test rates, and real-estate prices are impacting the income needed to buy a home.

The study shows the average home prices in Canada, the change in home prices over the past two months, and the income required for major cities across the country.

The lowest annual income required to buy a home is just upwards of $81,000 for Winnipeg, the highest being nearly a quarter of a million dollars to buy a home in Vancouver.

Ratehub.ca says the only cities to “buck the trend” of improved affordability were Halifax and Calgary, where average home prices rose by $5,300 and $2,100, respectively, but the increased income required to purchase a home in both cities was minimal, at $1,000 and $350 more, respectively.

“Halifax and Calgary were the two outliers, with $1,000 more income required to purchase the average home in Halifax and $350 in Calgary,” Laird adds. “These cities saw home prices increase.”

Vancouver home buyers saw “some slight relief” as the average price in the city softened by $6,800, leading to a drop in required income of $1,440.