Ownership Housing Affordability in Canada

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The National Bank of Canada last month released a document which they call their ‘Housing Affordability Monitor’ which tracks historical affordability of ownership housing—condo and non-condo—in ten of Canada’s largest cities. You can download the document in PDF format from the link below.


Everyone knows that housing prices keep going up and up and up and keep getting less and less affordable, which seems to be the ‘new normal,’ at least in Canada’s biggest cities. What will be interesting for people in the rental housing industry are the charts which compare the costs of buying to renting for each city. These show a decade’s worth of per-quarter data comparing “monthly mortgage payment on a median-priced 2 bed condo” to “average monthly rent for a 2 bed condo” as lines with bars showing the “average spread” between the two. Below is the chart for Toronto.

This chart is instructive since it reveals that in Toronto over the past decade the ‘spread’ between mortgage payments and rental payments for 2 bed condos has been fairly low on average as the two payment streams track each other fairly closely. However, in other cities, the ‘spread’ is much larger, and the two payment streams diverge wildly and sometimes invert.

I should note that the document has a “methodology” section at the back and after reviewing it I think it’s fair to say that nobody is going to completely agree with or accept the data sources and analysis techniques used by the document’s authors but that doesn’t diminish the document’s impact and value on a comparative basis.