You will have to save longer to cover the down payment for a new home or condominium in the national capital region, as home prices continue to rise.
The National Bank of Canada’s Housing Affordability report says it will take nearly four-and-a-half years of saving to cover the cost of a down payment for a new home in Ottawa-Gatineau. That’s up from 39 months of saving to cover the down payment in the winter.
The affordability report looks at the housing affordability in 10 markets across the country, and how long it will take to save for the down payment on a new home or condominium.
“Housing affordability worsens by the most in 27 years in Q2 2021,” says the report.
“Mortgage payments now engulf 45 per cent of income for a representative household, above the average since 1980,” said the National Bank of Canada. “Income growth and lower interest rates were conducive to improving affordability for most of the past two years. That is no longer the case in 2021, as income growth is being easily outpaced by home price increases, while mortgage interest rates also rose on a quarterly basis.”
In Ottawa, the median cost of a new home in Ottawa-Gatineau is $618,684, while the median cost of a condo is $360,055.
To cover the down payment, the National Bank of Canada says a household earning $124,891 a year and saving at a rate of 10 per cent, would need to save for 52 months.
If you plan to buy a condo in Ottawa-Gatineau, buyers earning a household income of $73,424 would need to save for 25 months.
The report notes home prices rose 8.4 per cent in Ottawa-Gatineau in the second quarter, and 24.2 per cent in the past year.
In February, the National Bank of Canada Affordability Report said a resident buying a home in Ottawa would need to save for 39 months, while condominium buyers would need to save for 22 months at 10 per cent of your income to cover the down payment.
HOUSING AFFORDABILITY ACROSS CANADA
The median price of a home in Canada was $873,188, while the median cost of a condo was $461,455, according to the report released this week.
The National Bank of Canada report says to save up for the down payment for an average Canadian home, buyers would have to save at a rate of 10 per cent for 69 months. That’s up from 57 months of saving a year ago.
In Toronto, it would take a household earning an annual income of $196,913 a total of 318 months to save for a down payment on a new home. The average price of a home in Toronto is $1.2 million.
In Vancouver, households earning an average of $252,877 would need to save at a rate of 10 per cent for 411 months to cover a down payment.
In Montreal, a household earning $100,489 would need to save at a rate of 10 per cent for 42 months to cover the cost of a down payment. The average price of a new home in Montreal is $492,777.