Cost of owning a home in Ottawa hits new high.
August 18, 2004 - The cost of owning a home in Ottawa pushed up once again in the second quarter, according to a report Wednesday, driving housing affordability to its weakest point in eight years.
In the latest edition of its Housing Affordability Index, RBC Economics reported that the price of a typical detached bungalow in Ottawa rose 5.4 per cent from a year ago to $228,200.
RBC uses the average price of a detached bungalow as the benchmark for comparison in its report.
With higher average selling prices, Ottawa affordability index rose to 31.6 per cent from 31.3 per cent in the first quarter of this year and from 31.2 per cent in the second quarter of 2003.
"Affordability in Ottawa is now at it weakest level in eight years," RBC said in the report.
The report expresses the monthly cost of owning a home, including the mortgage, taxes and utilities, as a percentage of the average pre-tax household income. The higher that percentage, the more expensive it is to own the home.
The report, which indexes the cost of ownership for major urban centres across the country, found that Ottawa is not alone. Higher selling prices and the inevitable rise in mortgage rates will make it more and more difficult for first-time homebuyers across Canada. Ultimately, market activity will slow and existing homeowners with a lot of equity will represent most of the buyers.
"New listings and sales activity were higher in the second quarter, but so were housing prices and mortgage rates which is why affordability eroded," RBC Carl Gomez said in the report. "Looking ahead, eroding affordability will reduce housing demand especially from the shrinking pool of potential first-time buyers. So demand will increasingly be dominated by existing homeowners looking to trade up."
In Toronto, affordability slipped to 37.2 per cent, or an average monthly payment of $1,956, from 35.3 per cent in the first quarter.
For Ontario as a whole, the affordability index rose to 30.5 per cent in the second quarter, up from 29 per cent in the first quarter, to reach its highest level since mid-2002. That works out to an average monthly payment of $1,453 to carry the home.
The national average during the second quarter was 31.7 per cent, or $1,332 per month.
The average benchmark price for a bungalow in Ontario was $219,107, compared with $228,200 in Ottawa and $312,347 in Toronto.
© Copyright 2004 The Ottawa Business Journal