Last Updated on October 24, 2023 by Neil Sharma
It would take 25 years to save for a down payment of a low-rise Toronto home, says a new report from National Bank.
At a savings rate of 10% on a $183,594 salary, it would take 297 months to achieve the down payment needed for the region’s $1,069,111 house. In fact, 59.7% of the homeowner’s income would go towards mortgage payments. Conversely, to afford the down payment on a $620,291 condo in Toronto, it would take 51 months at a savings rate of 10% on a $125,202 annual salary, and only 34.6% of income would go towards mortgage payments.
Housing prices in Toronto rose by 2.6% on a quarterly basis in Q1-2021, and 11.8% year-over-year, while median household incomes only increased by 1.2%. Moreover, even the Bank of Canada’s decision to plunge interest rates could not offset the surge in housing prices in Canada’s largest metropolitan area.
Montreal
Housing in Canada’s second-largest city is vastly more affordable than it is in Toronto. To afford the down payment on a low-rise home in the city, which averaged $464,684 in the first quarter of the year, it would require 40 months of saving at 10% rate on a salary of $94,760, and mortgage payments would comprise 32.2% of income. To afford a Montreal condo, which averaged $340,610 last quarter, 29 months of saving would be required for a down payment on a salary of $69,459, and mortgage payments would only eat up 23.6% of income.
Aggregate home prices in the city rose by 3.9% in Q1-2021, with condo and non-condo prices increasing by 2.5% and 4.1%, respectively. However, year-over-year, Montreal housing prices surged by 16.3%, but median household income only climbed by 1.3%.
Vancouver
It would take 32 years to save for a down payment at a rate of 10% on a salary of $237,201, considering that the city’s low-rise homes averaged $1,381,274 last quarter. Mortgage payments would also comprise a whopping 78.3% of income.
It would still require 55 months of saving at a salary of $128,364 for a down payment on a condo, which averaged $636,662 in Q1, and the share of income eaten by mortgage payments would be 36.1%.
Calgary
Thirty-three months of saving for a down payment on a $489,195 home would be required at a $99,759 salary. Moreover, mortgage payments as a share of income would be 26.3%. However, only 16 months would be needed at a $50,113 salary to afford a Calgary condo, which averaged $245,744 in the first quarter of the year, and mortgage payments would be 13.2% of income.
Condo prices rose by 1% in Q1, while non-condo prices were nearly twice as high at 1.9%. National Bank noted that Calgary actually became more affordable on a yearly basis.
Edmonton
To afford a $422,555 low-rise home in Alberta’s capital city, 29 months of saving at a rate of 10% on an $86,169 salary is required for a down payment, and mortgage payments would comprise 23.4% of income. On the other hand, only 15 months of saving at a salary of $44,661 is required for a down payment on a $219,009 condo, with mortgage payments not exceeding 12.1% of income.
Home prices in Edmonton only increased by 0.9% because, while low-rise home prices climbed 1.1%, condo prices actually dipped by 0.4%.
Ottawa-Gatineau
To afford the down payment on a low-rise home in the Ottawa-Gatineau area, which averaged $567,313 in Q1, a salary of $114,967 is needed, and it would take 45 months of saving at a rate of 10%. Mortgage payments would comprise 32% of income. To afford a $345,392 condominium would require a 24 months of saving for a down payment at a salary of $70,434, with mortgage payments of 19.5% as a share of income.
National Bank rated Ottawa-Gatineau as third among cities with the biggest prices increases over a quarterly basis and the top city in terms of annual increases. Condos and non-condos in the region increased by 2.2% and 4.3%, respectively, which eroded affordability, especially since median household income only increased by 1%.
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
