Housing affordability is currently at one of its worst levels since the 1980s, according to National Bank of Canada.
Taking current market trends into account, the situation is not likely to improve any time soon, said NBC analysts Stéfane Marion and Daren King.
“Given the unprecedented population growth that continues to far exceed the capacity to build housing, we believe that affordability challenges will persist in the short and medium term, even if mortgage rates decline over the next year,” NBC said.
“Since June 2012, it has not been possible to insure a mortgage of more than $1 million, forcing buyers to put at least 20% down,” NBC said. “Since December 2015, the minimum down payment for the portion of an insured loan over $500,000 has increased from 5% to 10%.”
Average home prices nationwide have also doubled since 2012, and headline inflation exceeded 30% during the same period.
However, “the mandated limits on mortgage insurance have never been revised upward,” NBC said. “Given the current impasse, we believe that mortgage insurance terms should at least be indexed to inflation in order to limit the deterioration of housing affordability in the country.”
