Financial pressure piles up as housing becomes unaffordableBy Andrew Rickard | November 30 2015 11:49AM
One in three Canadians think housing is now unaffordable, and the high costs may be making it difficult for them to cope with other financial issues.
In a survey conducted for the Manulife Bank of Canada, 38% of homeowners said they think the housing in their area is unaffordable. Those living in Canada’s largest urban areas were the least likely to describe their housing market as affordable; only 46% of the respondents in Vancouver, Calgary, Edmonton, Toronto, and Montreal said the price of real estate was within reach, while 68% of people in the rest of the country thought it was. Manulife says the perceived lack of housing affordability was most acute in Vancouver, where just 33% thought that housing was affordable.
Manulife notes that housing costs may be putting pressure on other aspects of homeowners’ finances. Although 73% of homeowners described themselves as "somewhat prepared" or "completely prepared" to deal with an unexpected household expense such as a major car repair or a furnace replacement, the data suggests this may not be the case. Asked if they have ever been unable to cover expenses with the money they had in their bank accounts, 38% admitted that they had been caught short at least once in the past year. When they didn't have cash on hand, 33% turned to a line of credit and 23% tapped their rainy-day savings, while 32% used a high-interest credit card; the remaining respondents had to borrow money from a family member.
"The challenge faced by many Canadians is that their income is relatively stable from month-to-month, but their expenses can vary significantly," comments Manulife Bank of Canada president and CEO Rick Lunny. "Access to rainy day savings or a low-cost line of credit are good options to safeguard against these fluctuations. However, if your backup plan is to carry high-interest credit card debt or borrow from a family member – you could be putting undue stress on your finances or relationships."