Owning home less strain, RBC reports

Postmedia News February 25, 2011

Canadians experienced less financial strain to own a home in the final months of 2010, according to a report from Royal Bank of Canada.

On Thursday, RBC Economics Research said home ownership affordability improved in the final three months of last year for the second straight quarter.

But it warned this reprieve, the result of lower mortgage rates and little rise in prices, is a temporary situation.

"We expect that the Bank of Canada will resume its rate-hike campaign this spring, and with borrowing costs set to climb further in the next two years, housing affordability will erode across the country," RBC chief economist Robert Hogue said.

RBC said the proportion of gross income needed to pay for home ownership -including mortgage payments, property taxes and utilities -fell 0.8 percentage points to 39.9 per cent in last year's fourth quarter for a detached bungalow.

For a standard two-storey, the toll declined 0.4 points to 46 per cent, and for condominiums, it was down 0.4 points to 27.6 per cent.

For bungalows, the amount of income needed to own a home fell 0.4 points to 68.7 per cent in Vancouver, 0.5 points to 46.8 per cent in Toronto and 0.4 points to 41.3 per cent in Montreal.

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