Halifax families paying more than 50% of after-tax earnings on mortgage payments: report

A new study finds the average Halifax family spends more than 50 per cent of their take-home income on their mortgage.

A Halifax family earning the local median income now has to spend more than 50 per cent of after-tax earnings on a monthly mortgage payment to buy a typical home, according to a new report published by the Fraser Institute.

“Halifax has experienced a sharp decline in housing affordability that has put ordinary homes beyond the reach of many families,” said Austin Thompson, senior policy analyst with the Fraser Institute, and co-author of Home Ownership and Rent Affordability in Canadian CMAs, 2014-2023 in a news release.

The report found the monthly mortgage payments required to buy a typical home in Atlantic Canada’s largest cities varied from 27.2 per cent of a median-earning family’s after-tax income in Fredericton, to 52 per cent in Halifax, after a 20 per cent down payment on a home.

This is an increase since 2014, when the share of median after-tax family income needed ranged from 17.2 per cent in Charlottetown to 27.9 per cent in St. John’s, N.L.

Mortgage Broker Alex Lavender said he sees the strain everyday. Even though interest rates have stabilized he said they are far higher than what buyers use to get just five years ago.

“We’re in the high three to four per cent range and I think a normal range would be two per cent which would help a little bit with affordability. But it is the house prices that is holding people back,” he said.

Even for people who are able to enter the market, Lavender cautions that the costs do not end with the mortgage.

“You have your property taxes, heating costs, water and insurance. You really have to budget it and really predict where it is going,” he said.

While house prices and rents have increased across the region, worker salaries in Atlantic Canada have largely stagnated over a 10-year period, which has also contributed to the increase, according to the report.

“Housing affordability is both a function of home prices and incomes, and as wages and incomes have flatlined across Atlantic Canada in recent years, that has exacerbated the housing affordability crisis,” said Steven Globerman, a senior fellow with the Fraser Institute and co-author of the study. “In order to make housing more affordable for families across Atlantic Canada, policymakers should focus on increasing wages and incomes as part of the solution.”

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