it even tougher to get into the market, although recent buyers are not out of the woods yet either.
Parliamentary Budget Officer Yves Giroux recently released his House Price Assessment, which said that in early 2015, house prices in most major cities in Canada could have been considered affordable based on costs and the ability of the average buyer to borrow. However, by the end of last year, house prices in Toronto, Ottawa and Hamilton were more than 50 per cent above the affordable rate, while in Vancouver and Montreal, they were unaffordable by a smaller margin.
According to Giroux, the situation is not expected to improve in the future, unless property prices drop or wages increase. This means the average buyer would struggle to get into the market, although he warned that those who recently bought homes are more vulnerable to rising interest rates, as they would be unable to cope with a sudden shock like the loss of income. His reported pointed out that given the significantly high debt loads of households in Toronto, Vancouver, Hamilton and Victoria, they are financially vulnerable to any of loss of income, which would make them less likely to keep up with mortgage payments, the face of such external shocks.
According to Giroux, homeowners who are better off financially are better equipped to handle rate hikes, while average income earners who recently bought homes “could be in for a rough ride” financially.
