Vancouver detached house costs are far above income: RBC

VANCOUVER (NEWS 1130) – “Epic surge in prices crushes affordability.”

That’s the headline for the Vancouver section of the Royal Bank‘s latest report on Canadian residential real estate.

Its quarterly index puts the various costs of owning a single-detached house at what the bank calls an “astounding” 119.5 per cent of income, up 9.9 percentage points in the first quarter of the year compared to the previous period.

RBC chief economist Craig Wright says “such a parabolic rise in prices signals the presence of over-exuberance in this segment of Vancouver’s market that is not fully justified by the robust local fundamentals.”

He also says “further price acceleration in recent months suggests that affordability will likely deteriorate even more.”

Wright says “the situation was much less severe” for apartment-style condos, with the affordability index rising “modestly” to 46% in the January-through-March period.

He adds “In sharp contrast, we see balanced conditions in most other markets… which is likely to keep affordability within reasonable levels.”