Here's how much you need to earn to buy a home in Ottawa

A new home is displayed for sale in a new housing development in Ottawa on Tuesday, July 14, 2020. Prospective buyers have lamented the torrid pace Canada's real estate market has moved at in recent years, but many feel 2023 may be the year their luck changes. THE CANADIAN PRESS/Sean Kilpatrick

The income required to purchase a new home in Ottawa dropped $2,300 in October, as interest rates continued to fall, and the average cost of a home dropped.

A new report from Ratehub.ca shows homebuyers needed an average income of $123,700 in October to purchase the averaged price home for sale in Ottawa, down from $126,100 in September.  Homebuyers needed an income of $127,830 in August and $132,060 in May to buy a home in Ottawa.

“Interest rates continued to drop month-over-month, which means improved affordability again this month," Penelope Graham, mortgage expert at Ratehub.ca said in a statement.

“The effects of the Bank of Canada’s last four rate cuts are becoming more prominent, as mortgage rates and the stress test continued to drop in October. However, demand combined with those factors is creating an affordability sweet spot for active real estate buyers.”

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Ratehub.ca looks at the income required to buy an average-priced home in Canada based on a 20 per cent downpayment, a 25-year amortization and $4,000 in annual property taxes, with a mortgage rate of 4.86 per cent and a stress test rate of 6.86 per cent in October.

On October 23, the Bank of Canada cut its key lending rate from 4.25 per cent to 3.75 per cent.

The average home price in Ottawa was $639,400 in Ottawa in October, down from $642,800 in September.

Ratehub.ca says the income required to buy a home dropped in 12 of 13 markets it looked at across Canada, with a $4,540 drop in Vancouver, $4,380 in Toronto and $4,060 in Hamilton.

The income required to buy a home ranges from $214,460 in Vancouver and $195,420 in Toronto to $77,120 in St. John's, $70,750 in Fredericton and $69,520 in Regina.