The sheer gap between the growth of Canadians’ income and the continuous increase in metropolitan housing prices would make 2020 the point of no return for home affordability in Vancouver, according to a recent study by the HuffPost Business Canada.
“It would mark the final year before monthly payments on a single-family home exceed the average monthly income in the city,” the publication stated in its analysis published at the end of May. “And it would be the last year in which condos could be considered within the range of housing affordability (30 per cent of income), if trends continue as they have.”
Using data from Statistics Canada and real estate boards nationwide, the study predicted that the average per annum mortgage payment for a single-family home at the benchmark price by 2020 would be $79,204.72. In contrast, the projected annual average income would be at $77,866.67.
To compare, a condo unit at benchmark price would cost $24,572.88 every year by 2020, exceeding the home affordability range—defined by the CMHC as 30 per cent of the average household pre-tax income—of $23,360.00.
The publication emphasized that these figures aren’t set in stone, however, as many other external factors can swing the pendulum from one extreme to the other.
“These forecasts don’t account for possible developments such as an interest rate hike, nor any possible new regulation by the federal government, or a crackdown on capital outflows from China (which is entirely possible),” the study authors said.
Even present numbers are already discouraging potential residents from settling down in the high-demand city, according to officials.
“I’m talking to people who are trying to recruit and hire people to work at businesses in Vancouver. And they’re choosing not to come to Vancouver because, on the salaries that are being offered, they can’t find adequate housing for their families,” B.C. NDP housing critic David Eby said, adding that the proliferation of foreign capital into Vancouver is making the contribution of mortgage-income disparity to price growth moot.
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