The federal election that we all knew would come this year was supposed to centre on affordability and, in particular, the cost and availability of housing. But the focus has shifted wildly from pressing, domestic issues to U.S. tariffs and trade turmoil.
Fortunately, affordability and housing have not disappeared from the campaign. All of the major political parties had implemented or announced policies designed to get more homes built and give first-time buyers better access to the market. Since the campaign started there have been additions and tweaks to the party platforms.
Outside of all the politics there are some encouraging signals from the economy. A recent report from well-known housing economist Robert Hogue shows a definite improvement in home affordability in the fourth quarter of 2024.
Homeownership costs (mortgage payments, property taxes and utilities) dropped for the fourth straight quarter, falling to 55.9% of household income, compared to 63.8% a year earlier. Falling interest rates have lowered mortgage costs, which has been a significant factor in improving affordability. The report suggests further rate cuts, along with relatively stable home prices and wage growth will continue to help affordability for the first half of 2025.
Whether anyone will take advantage of better affordability now seems to depend on the trade war triggered by the United States. Tariff uncertainty has already seen many buyers and sellers take a “wait-and-see” attitude, and move to the sidelines. Many analysts expect a protracted tariff battle will likely lead to an overall economic slowdown and higher unemployment, presenting a serious headwind for the market.