Canadians are spending a significant percentage of their income on housing.
RateHub.ca has developed an infographic that compares homeownership costs to pre-tax income earned by Canadians living in major cities.
To measure affordability, RateHub looked at homeownership as a percentage of monthly pre-tax income using the RBC Housing Affordability Measure.
RateHub’s data found that the Vancouver area tops the charts, as home ownership costs in BC’s largest city make up 79.7% of a typical household’s monthly pre-tax income.
This rate has actually decreased since the third quarter of 2016 when it measured at an alarming 92%.
The Greater Toronto Area (GTA) comes in second place at 72%, up 8.3 percentage points compared to the third quarter of 2016.
“When more than 70% of the average pre-tax income is required to purchase in a specific region, as is the case in GTA and Vancouver, it is clear that there are other factors at play,” said James Laird, co-founder of RateHub.ca, in a release.
“People buying in these geographies cannot be only relying on their income to pay for these homes. Many of them are relying on existing wealth that was not earned in the most recent tax year.”
Montreal, Calgary, and Ottawa make up the remaining top five most unaffordable cities coming in at 43%, 39.6%, and 34.8%, respectively.
Meanwhile, Atlantic Canada offers some of the most affordable housing prices in the country. Saint John, New Brunswick, is the most affordable city with costs at only 26% of pre-tax monthly income. Average home prices in the city cost $218,604.
Quebec City, also has relatively low rates with costs at 34.2% of pre-tax monthly income. A home in that city will cost you $277, 041.
The national average of 45.9% is far above the Canada Mortgage and Housing Corporation’s benchmark, which considers housing “affordable” when no more than 30% of pre-tax income is spent on homeownership expenses.