Parliamentary budget office says homes are less affordable despite low interest rates
The parliamentary budget officer is warning that home ownership has become even less affordable through the pandemic for the average buyer, who may find it even tougher to get into the market unless prices drop.
Housing prices were on a meteoric rise before the COVID-19 pandemic struck two years ago, and have been further juiced by rock-bottom interest rates, demand for more space and supply that can't keep up.
Budget officer Yves Giroux's report says house prices in most major cities could have been considered affordable in early 2015, based on costs but also on buyers' ability to borrow.
Giroux's office estimates that house prices in Toronto, Hamilton and Ottawa were more than 50 per cent above an affordable level by the end of 2021, and unaffordable by a smaller margin in Vancouver and Montreal.
He says the average income earner will find it ever harder to afford a home in the future unless prices drop or wages climb.
Giroux is also warning that those who recently bought homes are more vulnerable to rising interest rates and could find themselves unable to cope with a sudden shock like a job loss.
His report noted that debt loads in Toronto, Vancouver, Victoria and Hamilton were high enough that households could be considered financially vulnerable, meaning any income loss would make them less likely to keep up with mortgage payments.
Homeowners better off financially will be able to handle higher rates, he said, but Giroux said those with average incomes who recently bought homes "could be in for a rough ride" financially.
The report released Thursday adds to the evidence before members of Parliament who, Giroux said, have repeatedly come to his office with questions about the cost of housing.
Giroux's report said that at the end of last year, the average house price nationally was $811,700, an increase of 43 per cent from the $565,800 recorded in December 2019, a few months before the pandemic washed over the country.
The figure for December 2021 was also almost double the average price of $413,000 in January 2015.
Helping drive prices higher over the last two years has been low interest rates, driven there by the central bank to keep the economy churning, and federal supports that put a financial floor under households.
Giroux said gains in borrowing capacity that the financial circumstances afforded were far outpaced by home prices in several cities and actually widening the affordability gap.
Rates on fixed mortgages have crept higher on expectations that the Bank of Canada will start hiking its trendsetting rate next month. If, and when, that happens, variable-rate mortgages will start to climb as the central bank looks to cool overheated markets.
Giroux said rising rates will likely offset any increases in household income for the average income earner, meaning their ability to borrow, and therefore afford a home, will remain relatively flat.
Prices would have to drop to make home ownership more affordable to the average buyer, Giroux said. One possible avenue is to boost supply, which Giroux's report notes didn't kept up with the population boom between 2015 and 2019.
The federal government has looked to increase the supply of homes, promising funding to cities to help speed up development timelines and approvals.
On Thursday, Finance Minister Chrystia Freeland offered up transit funding to help cities manage revenue shortfalls, but required provinces and cities to speed up housing plans as a requirement of the cash.
Conservative housing critic Matt Jeneroux said the Liberals' efforts so far have been unable to close the affordability gap for homebuyers, and argued the government's plans wouldn't address the issue.
This report by The Canadian Press was first published Feb. 17, 2022.
IN DEPTH
![](https://www.ctvnews.ca/polopoly_fs/1.6922467.1718138898!/httpImage/image.jpg_gen/derivatives/landscape_800/image.jpg)
Why the outcome of one Toronto byelection could be consequential for Trudeau, Poilievre
The stakes are high in a looming June 24 federal byelection in a long-held Liberal riding in Toronto, and if Prime Minister Justin Trudeau's party shows signs of slipping, it could spark a bigger conversation, CTV News' pollster Nik Nanos says.
'We will go with the majority': Liberals slammed by opposition over proposal to delay next election
The federal Liberal government learned Friday it might have to retreat on a proposal within its electoral reform legislation to delay the next vote by one week, after all opposition parties came out to say they can't support it.
Budget 2024 prioritizes housing while taxing highest earners, deficit projected at $39.8B
In an effort to level the playing field for young people, in the 2024 federal budget, the government is targeting Canada's highest earners with new taxes in order to help offset billions in new spending to enhance the country's housing supply and social supports.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
Supports for passengers, farmers, artists: 7 bills from MPs and Senators to watch in 2024
When parliamentarians return to Ottawa in a few weeks to kick off the 2024 sitting, there are a few bills from MPs and senators that will be worth keeping an eye on, from a 'gutted' proposal to offer a carbon tax break to farmers, to an initiative aimed at improving Canada's DNA data bank.
Opinion
![](https://www.ctvnews.ca/polopoly_fs/1.6850735.1713368648!/httpImage/image.jpg_gen/derivatives/landscape_800/image.jpg)
opinion Don Martin: Gusher of Liberal spending won't put out the fire in this dumpster
A Hail Mary rehash of the greatest hits from the Trudeau government’s three-week travelling pony-show, the 2024 federal budget takes aim at reversing the party’s popularity plunge in the under-40 set, writes political columnist Don Martin. But will it work before the next election?
opinion Don Martin: The doctor Trudeau dumped has a prescription for better health care
Political columnist Don Martin sat down with former federal health minister Jane Philpott, who's on a crusade to help fix Canada's broken health care system, and who declined to take any shots at the prime minister who dumped her from caucus.
opinion Don Martin: Trudeau's seeking shelter from the housing storm he helped create
While Justin Trudeau's recent housing announcements are generally drawing praise from experts, political columnist Don Martin argues there shouldn’t be any standing ovations for a prime minister who helped caused the problem in the first place.
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
CTVNews.ca Top Stories
![](https://www.ctvnews.ca/polopoly_fs/1.6928674.1718497400!/httpImage/image.jpg_gen/derivatives/landscape_800/image.jpg)
Shooting at Michigan splash pad leaves 'nine, maybe 10 victims': authorities
Gunfire erupted at a splash pad in the Detroit suburb of Rochester Hills, leaving as many as 10 people wounded, authorities said.
As it happened: How the Oilers crushed the Panthers to force Game 5
The Edmonton Oilers' offence exploded in Game 4 to beat the Florida Panthers 8-1.
A new tax filing system could give Canadians more than $1 billion in unclaimed benefits: PBO
Canadians would get more than $1 billion in unclaimed benefits each year through an automatic tax filing system, according to a report published by the Parliamentary Budget Officer (PBO).
'They're not human beings, they're animals': Trump blasts immigrants for taking jobs
Donald Trump blamed immigrants for stealing jobs and government resources as he courted separate groups of Black voters and hardcore conservatives in battleground Michigan on Saturday.
Video shows northern Ont. storm hammer shoreline, breaking dock
The owner of a northern Ont. camp is continuing to clean up after an intense storm that prompted a tornado warning Thursday ripped through the area breaking his dock and downing trees.
'All hands on deck situation': City of Calgary declares state of local emergency over water main break
The City of Calgary declared a local state of emergency Saturday morning in response to the latest developments in a major water main break that is impacting the city.
BREAKING A 'brazen daylight shooting': 16-year-old boy was fatally shot in Scarborough during fight, say police
Toronto police are appealing for witnesses and information as they deploy a “significant amount of resources” into the investigation of the fatal shooting of a 16-year-old boy in Scarborough on Saturday afternoon.
Trudeau calls into question findings of stunning watchdog foreign interference report
Prime Minister Justin Trudeau says he has concerns with how conclusions were gathered in a spy watchdog report.
U.K. royals unite on palace balcony as Princess of Wales returns to public view after cancer diagnosis
London put on a display of birthday pageantry Saturday for King Charles III, a military parade that marked the Princess of Wales ' first public appearance since her cancer diagnosis early this year.
Local Spotlight
![](https://www.ctvnews.ca/polopoly_fs/1.6927206.1718382916!/httpImage/image.jpeg_gen/derivatives/landscape_800/image.jpeg)
Moncton bakery owner celebrates 35 years with 220-foot flatbread
Fancy Pokket owner Mike Timani has decided to create a 220-foot long flat bread to celebrate its 35th anniversary.
'Too much warming': Polar bears in Hudson Bay could go extinct by 2030s if global temperatures continue to increase
If certain goals that are in the Paris Climate Accord aren't met, the existence of polar bears in the Hudson Bay may come to an end.
Swift Current offers to temporarily rename itself if Taylor Swift returns to Sask.
In an attempt to invite one of the most popular recording artists in the world to the land of living skies – the City of Swift Current has offered to rename itself in honour of Taylor Swift.
Adult dogs, puppies arrive in Moncton from Manitoba in search of forever homes
More than a dozen dogs arrived by Cargojet early Thursday morning to the People for Animal Wellbeing Shelter to find a permanent place to call home in New Brunswick.
Video captures whale breaching off Peggy's Cove, N.S.
Peggy's Cove, N.S., is one of the most famous locations in the Maritimes. Recent visitors were treated to more than just the iconic landmark.
Hundreds of fans line up to meet the Trailer Park Boys at promotional event
Hundreds of fans lined up to meet the Trailer Park Boys in Dartmouth, N.S., Tuesday, as Ricky, Bubbles and Julian promoted their new brand of potato chips.
'Nothing a little duct tape won't fix': Bear breaks into northern Ont. woman's car, destroys interior before taking nap
Car break-ins plague Canadians across the country, but instead of worrying about theft, a northern Ontario woman is cleaning up a big mess that she says will not be covered by insurance after a black bear broke into her Honda Civic and took a nap.
Albertans attempt to build the world’s tallest Popsicle stick structure
Members of a Hutterite colony in southern Alberta have potentially built the world's tallest structure made of Popsicle sticks.
After 300 days in a B.C. shelter, this dog finally found his forever home
A dog who spent the first three-and-a-half years of his life suffering and almost a year at a shelter has found his forever home, according to the BC SPCA.