Report: RBC waves red flag over Vancouver housing market

Sept. 27, 2010 | Market Update | By Aaron Rossetti

By Scott Simpson, Vancouver Sun - RBC economist Robert Hogue is raising a "red flag" about housing affordability in Vancouver.

The bank's quarterly report on housing trends and affordability, released Monday, says that Vancouver is one of a handful of Canadian markets where the share of household income taken up by home ownership costs "is at worrisome levels."

Average home prices in Vancouver have jumped about 40 per cent year to year, according to RBC, and the proportion of median pre-tax household income required to service the cost of a mortgage on an existing housing unit exceeds 70 per cent for both two-storey homes and detached bungalows.

A standard condo consumes about 43 per cent of income according to RBC.

"In Vancouver, Canada's most expensive market, RBC housing affordability measures are very close to their all-time high, which points to significant underlying stress and raises a red flag," the report says.

It adds that "very poor affordability is likely to restrain demand in the period ahead.

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