February 04, 2021, by Sean MacKay

According to the National Bank of Canada’s Housing Affordability Monitor, it currently takes a household earning the country’s median income 60 months — or five years — at a savings rate of 10% to reach even the minimum downpayment on a typical Canadian home.

What makes the current situation so unusual is that despite the economic damage the country has sustained through the pandemic, housing affordability actually improved by some measures through 2020.

But for aspiring homebuyers who are only beginning to save for a downpayment, the situation has only worsened in recent months. That’s because soaring home prices recorded across the country have increased the minimum downpayment required to purchase a home.

Things are set to be even more challenging as affordability is likely to deteriorate in the coming months while prices are expected to continue rising through the year.

“With interest rates unlikely to rise soon, vaccine rollout ushering a return to normal and market conditions in favour of sellers, home prices are on track to keep growing in 2021,” wrote Bank economists Kyle Dahms and Camille Baillargeon

Saving for a downpayment has never been harder for Canadian homebuyers: National Bank

What does this mean?

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