Navigating Canada's Housing Affordability Crisis: Insights from National Bank

The Canadian housing market has been a topic of significant discussion and concern in recent years. The latest "Housing Affordability Monitor" report, released on November 1, 2023, sheds light on the current state of housing affordability in Canada, particularly in the third quarter of 2023. In this blog post, we delve into the key findings of this report, offering insights for homebuyers, policymakers, and real estate professionals.

The Deterioration of Housing Affordability

The report begins with a stark revelation: there has been a significant decline in housing affordability during Q3 2023. This downturn erases nearly two-thirds of the improvements made in the previous quarters, marking a worrying trend for potential homebuyers. The nationwide increase in home prices by 4.6%, the most substantial in six quarters, is a primary factor in this decline.

Contributing Factors

Several critical factors are contributing to the growing challenge of affordability. These include:

• Rising Mortgage Interest Rates: An increase of 32 basis points in the quarter.
• Lack of Supply: A chronic issue in the resale market.
• Population Growth: Record levels of population growth are putting additional pressure on the housing market.

The Challenge for First-Time Homebuyers

For those looking to enter the housing market for the first time, the outlook is particularly challenging. The report suggests a further deterioration in affordability towards the year's end, indicating tougher times ahead for this group.

Regional Differences

The report's regional analysis shows a widespread deterioration in affordability across all ten markets studied. Cities like Vancouver, Toronto, and Victoria are at the forefront of this decline, highlighting the varied challenges faced in different parts of the country.

Condo vs. Non-Condo Market

An interesting aspect of the report is its comparison between the condo and non-condo segments. The condo market experienced a 2.5 percentage point worsening, which is significantly less than the 4.5 percentage point decline seen in the non-condo segment.

Methodology and Data Sources

The report's methodology involves tracking both the condo market and other dwelling types. It emphasizes two main affordability hurdles: the down-payment amount and the monthly mortgage payment as a percentage of income. The data for this analysis comes from reputable sources like Statistics Canada and CMHC.

City-Specific Trends

Each major Canadian city faces unique housing affordability challenges. The report provides detailed insights for cities like Toronto, Montreal, Vancouver, Calgary, and Edmonton, offering a nuanced understanding of each market.

The "Housing Affordability Monitor" report is an essential tool for understanding the dynamics of the Canadian housing market. Its findings indicate a challenging period ahead for homebuyers, especially for those entering the market for the first time. Policymakers, real estate professionals, and potential buyers must pay close attention to these trends to navigate the complexities of Canada's housing affordability crisis effectively.

Stay Informed

For more insights and updates on the Canadian housing market, stay tuned to our blog. We aim to provide you with the latest information and analysis to help you make informed decisions in this ever-evolving market.