House Price Assessment: A Borrowing Capacity Perspective
This report provides an assessment of house prices relative to a household’s capacity to borrow and pay for the purchase of a house in selected Canadian cities.
Just prior to the pandemic, the average house price in Canada at the end of 2019 was $565,800—an increase of 37% from January 2015. Population increases sharply outstripped housing completions, which suggests that supply was not keeping pace with demand.
At the end of 2021, the average house price nationally was $811,700—an increase of 43% from December 2019 and a 97% increase compared to January 2015. Our estimates indicate that in December 2021, average house prices in Hamilton, Toronto, Halifax and Ottawa were more than 50% above affordable levels for households earning average incomes.
Our results suggest that household financial vulnerability is elevated in several census metropolitan areas for households that have recently purchased homes, indicating that increases in interest rates will further stretch their finances.
Parliamentary Budget Officer