MNI DATA IMPACT: Vancouver Homes 9X Income Underline BOC Worry

By Greg Quinn

     OTTAWA (MNI) - Vancouver home prices are nine times the income of owners

according to a government study, the kind of imbalance that has kept the BOC

from cutting interest rates.

     The city's median assessed property value of C$889,000 last year compares

with income of C$92,600, according to a study published Thursday by Statistics

Canada. That gap is greater than the ratio of 5.7 for Toronto and 3.1 in Ottawa.

     --REBOUND

     The BOC has held policy rates at a G7 high 1.75% this year, in large part

because of concerns about re-igniting a housing boom in Vancouver and Toronto

that has led to a rise in heavily indebted households. 

     There are already signs housing is on the rebound again after regulators

stepped in to curb speculation, Deputy Governor Tim Lane said in a speech today,

with some of those gains coming along with rising population and incomes.

     Canadian house prices increased 69% between 2007 and 2017 while median

income rose by 28%, Statistics Canada said in the report. 

     The boom has turned home ownership into a "pipedream" for half of younger

buyers, a separate KPMG report published Thursday found. Two in five of those

surveyed for KPMG said the price of their home will fall in the future.

     --VALUE

     The imbalances are even more intense in central Vancouver, where the home

price to income ratio is 13. Life is more affordable on the east coast with a

ratio of 2.4 in downtown Halifax, Nova Scotia.

     People who have bought homes tend to be more established financially,

suggesting a lower risk to the financial system. "Income of residential property

owners was considerably higher than the income of those who did not own," and

families tend to be older married couples, the report found.

     The price to income ratio isn't a complete picture of affordability. The

study doesn't capture things such as a family's wealth or cases where today's

assessed price is much higher than a residence that may have been purchased

decades ago. On the other hand, assessed home values can lag market prices. 

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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