For the first time in years, Montreal-area homes have become less affordable than houses in greater Toronto, a survey by the Frontier Centre for Public Policy says.
Montreal is now ranked as Canada’s second-least affordable housing market with one million inhabitants or more – right after Vancouver – the survey published this week by the conservative, Prairies-based think tank says.
The survey results are based on data from the third quarter of 2010. To rate housing affordability, survey authors took the median multiple – median housing price divided by gross annual median household income – in 325 markets in Australia, Canada, Hong Kong, Ireland, New Zealand, Britain and the United States.
Affordable cities have median multiples of around 3.0 – where median house prices are three or less times median household incomes.
Montreal was listed as a “severely unaffordable� market with a median multiple of 5.2, compared with 5.1 for Toronto. The report illustrates how Montreal salaries have failed to keep up with home prices: Only four years ago, the survey ranked Montreal as moderately unaffordable, with a multiple of 3.8 and a ranking just ahead of St. Catharines, Ont.
Yet despite the steady appreciation of Montreal housing prices – even through the recent global economic crisis – other analysts haven’t assessed city housing prices as being less affordable than those in Toronto.
While RBC senior economist Robert Hogue wouldn’t comment on the Frontier Centre’s survey, he said the latest affordability index he authored found Montreal to be more affordable than Toronto in most housing categories.
“In most cases, Toronto would be more expensive and less affordable than Montreal – except for maybe condos,� Hogue said.
Overall, homes in Canada cost 4.6 times the average annual salary of just less than $43,000.
“There are a lot of people that tend to be squeezed out of the housing market,� said David Seymour, a policy analyst with the Frontier Centre. “Owning your own little patch of Canada is a dream for a lot of people that is getting tougher.�
Some cities, such as Windsor, Ont., remain very affordable. The average price of a home in Windsor was $145,000, according to data from the third quarter of last year, only 2.1 times the average median income of $68,900.
Meanwhile, Vancouver is the least-affordable metropolitan area, where the average home costs $602,000 – or 9.5 times the $63,100 median income.
The only cities that fared worse than Vancouver were Sydney, Australia, at 9.6 times the median income, and Hong Kong, at 11.4 times.
Buying a home in the Asian financial hub – synonymous with super-rich tycoons and gleaming office towers – will cost an average of $330,939, out of reach for a population with a median annual income of less than $30,000.
“All bets are off there. None of the normal rules apply,� Seymour said.
About 75 of the 325 cities analyzed were labelled “severely unaffordable,� where housing costs more than five times the average income. Along with Vancouver, three other cities in B.C. – Victoria, Abbotsford and Kelowna – fell into that category.
The only two other “severely unaffordable� Canadian cities were Montreal and Toronto.
And while Calgary and Edmonton continue to see rapid growth and soaring home prices, Saskatoon has overtaken the Alberta hubs in terms of housing affordability.
Atlantic Canada is the most affordable market in the country, with housing costing 2.3 times the median income in Fredericton; 2.6 times in Charlottetown; 3.3 times in Halifax; and 3.4 times in St. John’s.
Postmedia News contributed to this report
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