Home ownership still ‘distant dream’ for many Canadians, says economist

VANCOUVER (NEWS 1130) – Hundreds more dollars have been tacked onto the typical mortgage payment in Canada, with one bank revising its real estate predictions for the year.

RBC says the federal government has tread very lightly when it comes to trying to slow down frenzied real estate in cities like Vancouver and Toronto.

A senior economist with the bank says policy makers have ignored calls for forceful action, delaying a “much-needed rebalancing” of the housing market. Robert Hogue adds home ownership remains a “distant dream” for many people in Canada.

Qualifying for a mortgage became slightly tougher in June, but Hogue feels that won’t make much difference for buyers who are still trying to outbid each other.

RBC now predicts housing prices will rise another 13 per cent this year, after first forecasting an eight per cent increase. It is also now expecting sales across Canada to increase by 16 per cent.

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Hogue says while this would be great news for existing homeowners, “it would be a very different story for future first-time buyers.”

“The run-up in prices through the pandemic has already resulted in mortgage payments increasing $330 to $2,500 per month for a standard house in Canada (valued at $724,000 in April). Our projected price increase over the next 12 months (4.2%) would add another $150 per month, making ownership costs that much harder to handle. The down payment for that house has also gone up. Clearly, future buyers will face more intense affordability pressure across many parts of the country.”