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

The Bank of Canada raised its key interest rate Wednesday in an effort to tame inflation, and cool red hot housing markets. (Leah Larocque/CTV News Ottawa)

The amount of money Ottawa residents need to earn to afford a new home increased by $5,600 in March compared to a year ago, despite home prices falling by more than $105,000.

A new report by Ratehub.ca, an online mortgage brokerage service, finds higher mortgage and stress test rates increased the amount of income required to purchase an average priced new home in Ottawa and across Canada.

The report looks at data from the Canadian Real Estate Association on 10 major cities comparing home prices and the income required to purchase a home.

Ottawa homebuyers needed an average income of $127,350 in March to purchase the average priced home, up from $121,700 in March 2022. Meantime, the average price of a new home in Ottawa dropped from $728,200 in March 2022 to $622,300 last month.

The Ratehub.ca survey finds the average income required to purchase a new home increased in nine of the 10 markets surveyed across Canada, with the average income required in Vancouver increasing by $21,360.

"Even though home values are down in 9 out of 10 cities we looked at, affordability has actually gotten worse because rates have increased so much that Canadians now qualify for less compared to a year ago," James Laird, co-CEO of Ratehub.ca, said in a statement.

"Homebuyers have to earn between $5,650 and $21,360 more in additional annual income to buy a home, compared to March 2022.

"With supply of new listings tight and some home buyers returning to the market, don’t expect home affordability to improve in the coming months."

The report by Ratehub.ca included a stress test rate of 7.54 per cent and a mortgage rate of 5.54 per cent.

The average income required to buy a new home in Canada ranges from $221,580 in Vancouver to $75,650 in Winnipeg.

In January, Ratehub.ca reported Ottawa residents needed to earn $122,440 a year to buy a new home. The average price of a home in Ottawa was $603,900 in January.