National Bank of Canada Toronto Housing Affordability Report

According to a new housing affordability report, Torontonians with an average annual income of $91,858 will need about 25 years to save for a down payment on a home. However, the report notes that affordability has improved in the real estate market.

The National Bank of Canada (NBC) released its housing affordability report for the first quarter of 2023, in which it analyzed the condominium market in Canada's 10 largest cities, as well as other housing and the real estate market as a whole.

The bank factored in how long it would take an average-income household to save up a down payment, which is measured by the number of months needed to save for a minimum payment at a savings rate of 10 percent of pre-tax income. .

The down payment for a non-condo (detached or semi-detached home) in Toronto is 20 per cent, while for Hamilton it's about seven per cent, an NBC spokesperson confirmed.

The calculation also assumes a 25-year amortization period and a monthly mortgage payment assuming a five-year term.

Nationwide, the report notes that affordability has steadily improved, marking the largest improvement in affordability in ninety-four years.

Vancouver, Toronto and Hamilton saw the biggest price declines this quarter, as well as the best improvements in affordability. However, Toronto's mortgage payment percentage of income (MPPI) is still higher than the Canadian benchmark, which is just under 83 percent.

The Greater Toronto Area (GTA) saw its second improvement in affordability in the first quarter of 2023 after nine consecutive quarters of deterioration.

“The quarterly improvement in the composite index was driven by a 2.6 percent decline in home prices, a 1.4 percent increase in income and a slight decline in interest rates,” it said.

While the report predicts that GTA real estate signs have improved, prospective home buyers will still have some time to save up for a down payment on a home.

In the Toronto market, a qualified household income of $236,221 is required to purchase an “executive home” priced at $1,163,670. Calculated with an average income salary, the account will take 304 months – about 25 years – to accumulate the required down payment.

To save for a $695,691 condo in Toronto, prospective buyers need to save for 58 months (or less than five years) to pay the required down payment.

Those looking to buy a single-family home in Hamilton will save for 93 months (or seven and a half years) on an average annual income of $88,109.

Hamilton's condo market is similar to Toronto's. With a representative condo priced at $671,694, prospective buyers will save 57 months to meet the down payment requirement.