The latest RBC Royal Bank home affordability report is a rather dark dissertation that talks about home buyers paying premiums – and significant ones in some regions – over what normal pricing would have been prior to the pandemic.
The residential real estate market is getting a bit toppy in some parts of Canada.
The highest premium was being paid in Halifax: 26 per cent higher than pre-pandemic norms as a result of house prices rising by nearly 50 per cent in that market through 2020 and 2021. Saskatoon, on the other hand, showed the lowest premium of all the major cities.
They did one further assessment, looking at what prices would have been if normal conditions in place before the pandemic had continued.
Pricing in Regina would have fallen 3.5 per cent. Instead, pricing rose by nine per cent. In Saskatoon, the fall would have been 10 per cent while we actually saw a five per cent gain.
In other words, premiums were being paid in both cities but they are at the low end of the national range and the bank expects affordability to deteriorate further as interest rates rise through the year, likely by 1.5 per cent.
