Incomes failing to keeping pace
Ashley Ford
Province
Keeping a roof over your head is getting a little more financially difficult, especially in high-priced Vancouver and the booming Western provinces.
Although the vast majority of Canadian households live in suitable and adequate housing, 1.7 million, or 14 per cent, spent 30 per cent or more of their budget on shelter costs in 2004, a Statistics Canada study has found.
Traditionally, the idea of affordability has been based on a ratio of housing costs to total household income, with a household paying 30 per cent or more of its pre-tax income for housing considered to have affordability problems.
The problem stems largely from high house prices versus relatively modest household incomes, which haven’t kept pace with housing costs, said RBC assistant chief economist Derek Holt.
That trend is expected to ease in some parts of the country next year as prices start to level off and even decline, but not in B.C. or Alberta.
The study found 12 per cent who were spending more than 30 per cent of income on housing, including two per cent who were spending 50 per cent or more.
However, high prices notwithstanding, it suggests it is still better to own a home than rent.
The study revealed renters were more likely to have affordability problems and almost a third — 31 per cent — of people who rented spent more than 30 per cent of their income on shelter compared with only six per cent of owners.
Rental households consisted mostly of individuals living alone, relying on government assistance, or having low incomes.
The average shelter cost in 2004 was $9,400, about 15 per cent of an average household budget. The study said renters in higher-priced cities such as Vancouver were more likely to struggle with affordability than home-owners.
“Although shelter costs vary considerably across Canada, household income was the major factor affecting affordability,” StatsCan said. Renters earning less than $19,190 a year were 18 times more likely to be cost-burdened when it comes to housing than people above the median income.
Having two earners in the household also significantly reduced the odds of affordability problems, the study says.
© The Vancouver Province 2006