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More and more Canadian residents are finding it difficult to achieve their home ownership dream

But there is no mistaking the impact of households in Vancouver and Toronto. Based on the gross debt service ratio cap of 39 per cent set by Ottawa — the percentage of your income required to cover all housing costs — both cities appear way out of reach for most households.

“One consequence stemming from the sharp house appreciation is that more and more Canadian residents are finding it difficult to achieve their home ownership dream,” said DBRS, which said that, based on theoretical calculations using average price, average income and average five-year mortgage rates, the GDSR is 82 per cent in Vancouver and 50 per cent in Toronto.

DBRS explains the trend in home prices, low-interest rates and available liquidity have led to a 6.5 per cent increase in mortgage growth and a 3.2 per cent increase in credit growth and driven total household credit to $2 trillion. Household debt as a percentage of disposable income hit a record 169.9 per cent in the second quarter of 2016.



“However, household net worth has also been increasing to close to five times the amount of credit outstanding,” DBRS added.

Ottawa introduced measures that went into effect Monday that are expected to cool the market, among the changes a requirement that consumers qualifying for a home loan do so based on a rate much higher than the one on their contract.

“There are many factors driving the current sharp home value appreciation in Vancouver and Toronto, so that there are no simple solutions to restoring the balance,” DBRS says. “The stream of new government measures introduced this year are expected to contribute to cooling down the market.”

Financial Post

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