RBC housing forecast Canadian households have gotten wealthier for 2019 over the last decade (% change from 2018) Average increase in assets, per household per year, since 2008 in constant 2018 dollars Sales Prices $12,200 Vancouver 0.0% -2.5% $5,700 – Equity & Investment Fund shares $4,300 – Life insurance & pensions Calgary 1.0% 0.5% $7,800 $2,300 – Currency & deposits –$100 – Debt securities Toronto 5.6% 0.5% Montreal 2.6% 4.0% $1,000 Owners’ equity Financial Household in real estate assets disposable income Source: Statistics Canada, RBC Economics Research Our view is that “ housing prices will be With interest rates now climbing, expect dynamics to change for both sides largely flat in the near of households’ balance sheets, not just liabilities. On the asset side, we term (in part due to see more limited growth prospects in real estate holdings. Our view is that housing prices will be largely flat in the near term (in part due to rising rates) rising rates) and the and the ownership rate will decline in Canada, due to affordability issues. ownership rate will Some downward pressure is also likely to build on the value of households’ decline in Canada, future pension plan benefits. So after a strong decade-long run of aggregate household wealth growth in due to affordability Canada, we may be facing a slower rate of appreciation over the next little issues. while. If this is the case, much will rest on (so-far meagre) income gains to ” ease the impact. Bar to home ownership Projected share of income, 2019 88% 79% of income of income Vancouver Toronto RBC Economics Research | Navigating 2019 - 9 big insights for the year ahead | January 2019 5