Income required to buy a home in Ottawa drops $850

A new home is displayed for sale in a housing development in Ottawa on Tuesday, July 14, 2020. (THE CANADIAN PRESS/Sean Kilpatrick)

The income required to purchase a new home in Ottawa dropped $850 in June, as the average price of a new home decreased this spring.

A new report from Ratehub.ca, an online mortgage brokerage service, shows the average income required to buy a new home in Ottawa was $131,210 in June, down from $132,060 in May.

The income required to purchase a new home dropped as the average price of a new home decreased from $651,300 in May to $647,700 last month.

Ratehub.ca looks at the income required to purchase a new home in June with a mortgage rate of 5.47 per cent and a stress test rate of 7.47 per cent. The income is based on a mortgage with a 20 per cent downpayment and a 25-year amortization.

The study shows six Canadian cities saw home ownership affordability improve. The income required to purchase a home dropped in Regina, Victoria, Ottawa, Vancouver, Toronto and Hamilton in June.

In Hamilton, the average income required to purchase a home in the city dropped $3,550 to $167,550 in June, as home prices dropped by $18,400.

The average income required to purchase a home ranges from $231,360 in Vancouver and $214,360 in Toronto to $70,230 in Fredericton and $72,010 in Regina. Halifax saw the largest month over month increase in the income required to buy a home, increasing $1,560 in June to $113,450.

“While interest rates continued to remain relatively flat month-over-month, the increase in home values was enough such that affordability worsened in seven cities," Penelope Graham, mortgage expert at Ratehub.ca said in a statement. "And on the flip side, the decrease in home values was enough to improve home affordability in six cities.”