Home owning costs are set to soar again

Thursday, February 27th, 2003

Paul Luke

B.C., already Canada’s most expensive province in which to own a home, is about to get even costlier, RBC Economics says.

B.C. homeowners paid an average of 39.7 per cent of pre-tax household income at the end of last year to keep a roof over their heads, Royal Bank economists said yesterday.

This amounts to $1,564 a month to service the costs of owning an average detached bungalow, the bank said in its latest housing affordability index.

The national average was $1,248.

The percentage of household income needed to own a house in B.C. rose to 39.7 per cent in the last quarter of 2002 from 38.9 per cent a year earlier.

“Owning a home in B.C. continues to be the most expensive in Canada with the steady increase in average housing prices and slow household-income growth responsible for the recent erosion in affordability,” RBC economist Carl Gomez said. “To uphold housing demand throughout 2003 at these high levels, incomes and job growth will need to improve in order to offset the expected increases to borrowing costs and house prices.”

Home ownership in B.C. will get costlier during the first quarter of this year as monthly payments rise to $1,597, the bank said. That compares with an expected Canadian average of $1,288.

Vancouver remained Canada’s most expensive city in which to own a home at the end of 2002, with an affordability index of 47.7 per cent. This compares with 39.1 per cent for Torontoand 30.7 per cent for Montreal.

The average Canadian index is expected to rise to 32.7 per cent in the first quarter, climbing to 33.4 per cent later in the year.

The higher the index, the harder it is to afford a house. Monthly ownership costs include mortgage payments, utilities and taxes.

On the bright side, housing remains an engine of economic growth for B.C., the bank said.

© Copyright 2003 The Province

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