Report shows you now need to earn over $186K to afford an average Victoria home

Victoria home prices dipped slightly in June, but buying a home in the region still became more difficult as mortgage rates continued to rise.

According to Ratehub.ca’s latest home affordability report, a household needed an annual income of approximately $186,200 to purchase an average-priced home in Victoria last month.

That is $700 more than the income required in May, despite Victoria’s average home price falling from $893,000 to $890,100.

The estimated monthly mortgage payment also increased by $21, climbing from $4,582 in May to $4,603 in June. Over the course of a year, that works out to an additional $252 in mortgage payments.

The report found that higher borrowing costs erased the benefit of Victoria’s $2,900 decline in average home prices.

“Mortgage rate increases were the primary factor impacting home affordability this month,” said Jamie David, senior director of mortgages at Ratehub.ca.

For its calculations, Ratehub.ca used an average five-year fixed mortgage rate of 4.57% in June, up from 4.49% in May. The mortgage stress test rate also increased from 6.49% to 6.57%.

Among the 13 Canadian cities included in the report, Victoria had the third-highest income requirement. Only Vancouver and Toronto ranked higher, where buyers needed an annual income of $226,400 and $195,940 respectively. .

Across Canada, affordability worsened in 11 of the 13 cities studied.

Calgary experienced the largest month-over-month change, with buyers needing an additional $4,670 in annual income after the average home price increased by $4,000. St. John’s followed with an additional $2,380 required.

The income needed to purchase an average home Halifax saw the biggest improvement where it fell by $1,400 after prices dropped by $11,400. Hamilton was the only other city where affordability improved, with the required income declining by $230.

“With home prices appearing to bottom out and fixed mortgage rates under increasing pressure, buying conditions may not meaningfully improve in the near future,” said David.

The Victoria calculation is based on a 10% down payment, a 25-year amortization, annual property taxes of $4,000 and monthly heating costs of $150. Ratehub.ca used average home-price data from the Canadian Real Estate Association’s MLS Home Price Index.

The report is intended for illustrative purposes, meaning the actual income and mortgage payment required will depend on a buyer’s down payment, debt, interest rate, property taxes and other expenses.