VANCOUVER – A new report says soaring property prices mean millennials in Vancouver have the lowest discretionary income among 10 Canadian cities it analyzed.
Vancity Credit Union says a typical Vancouver couple aged 24 to 34, with a combined annual income of about $72,000, would go into debt by $2,745 a year after buying an average priced property and paying essential expenses including property taxes, food, utilities and transportation.
The housing market in Toronto is the second-most expensive and a millennial couple there had the next lowest level of discretionary income.
The report says a couple in Toronto would have about $3,400 in discretionary income annually after buying an average priced house.
Millennial couples in Edmonton have the highest level of annual discretionary income at more than $47,000.
The report says that when childcare is added, a Vancouver family with one youngster in full-time care faces a debt of more than $17,000 per year.
Income and household spending costs in the report are based on Statistics Canada data. Housing figures are based on prices for March 2016 from real estate boards across the country.
Vancity warns that millennials in Vancouver may need to reconsider home ownership as the first and best way to create wealth, adding that a lack of rental housing in the region is also a problem.
“The status quo isn’t good enough if we want this generation to be able to put down roots, possibly have a family and still enjoy a basic quality of life in Vancouver,” says William Azaroff, Vancity’s vice-president of community investment.
Yearly costs for an average home purchased in Metro Vancouver in 2016 are $44,354, and the report says that millennials would have to give up the dream of a single-family home in order to ease the budget crunch.
Buying a townhouse at an average cost leaves about $9,500 annually in discretionary income, and that climbs to about $16,400 if a condominium is purchased, the report says.
However, Vancouver lacks an adequate supply of townhouses as an option for families who can’t afford homes.
“Toronto and Vancouver are particularly difficult cities in which to raise a family and have money left over to nurture and improve well-being,” the report concludes.
“In these cities, basic expenses eat up the majority of income. And in Vancouver, this can be directly correlated to skyrocketing prices for stable, appropriate and affordable housing.”
The study makes a number of recommendations, from tax credits for new housing development to creating thousands more units of rental housing by 2021.