Parliamentary budget office says homes are less affordable despite low interest rates

OTTAWA — The parliamentary budget officer is warning that homeownership has become even less affordable through the pandemic for the average buyer, who may find it even tougher to get into the market unless prices drop.

Housing prices were on a meteoric rise before the COVID-19 pandemic struck two years ago, and have been further juiced by rock-bottom interest rates, demand for more space and supply that can’t keep up.

Budget officer Yves Giroux’s report says house prices in most major cities could have been considered affordable in early 2015, based on costs but also on buyers’ ability to borrow.

Giroux’s office estimates that house prices in Toronto, Hamilton and Ottawa were more than 50 per cent above an affordable level by the end of 2021, and unaffordable by a smaller margin in Vancouver and Montreal.

He says the average income earner will find it ever harder to afford a home in the future unless prices drop or wages climb.

Giroux is also warning that those who recently bought homes are more vulnerable to rising interest rates and could find themselves unable to cope with a sudden shock like a job loss.

This report by The Canadian Press was first published Feb. 17, 2022.

The Canadian Press

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