The second quarter of 2020 showed improved home affordability in Canada

The recent poll by National Bank shows that Canada’s large urban centres were more affordable in the second quarter of this year.

Such results followed worsening affordability during the previous two quarters. The main drivers of the improvement were higher incomes and lower interest rates.

“The rates were down by 0.19% in Q2, reflecting the BoC’s decisions,” – says the report. “Combined with incomes, mortgage rates were enough to offset the housing prices increase”.

According to NBC, the quarterly results don’t show the entire picture of a 5-year fixed rates decline seen during the pandemic.

“The preliminary data for rates shows more improvements in the third quarter,” – the report says. “Although we expect this to improve affordability, housing prices will likely remain resilient based on the recent resale market data with record sales.”

Not only economic and real estate market indicators have improved during the previous few months, but so did the homeowner sentiment.

The survey by Mortgage Professionals Canada shows monthly improvements in homeowner confidence in August.

First of all, there was an increase in the share of non-owners who plan to buy a home in the coming year: from 7% at the year-end 2019 to 16% in August. Moreover, we’ve seen a significant decrease in the number of non-owners who said they would never purchase a home, from 32% to 19%.

The recent survey also shows a hike in the number of homeowners who believe now is a good time to purchase a home or condominium (the average rating was up from 5.82 at the end of 2019 and 6.05 in July to 6.18 in August). A number of 8-10 reflects a strong agreement and a number of 1-3 reflects a strong pessimism.

In addition to it, Canadian consumers were also more likely to predict a home prices increase than in July (from 5.94 to 6.46).

 

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