Here's what you'll need to earn to afford a house in Ottawa in 2023

A new home is shown for sale in a housing development in Ottawa on Tuesday, July 14, 2020. (Sean Kilpatrick / THE CANADIAN PRESS)

The amount of money an Ottawa resident needs to make in order to afford a house is up compared to this time last year, but down from the middle of summer.

Online mortgage brokerage service Ratehub.ca has compiled data from the Canadian Real Estate Association about 10 major cities comparing home prices and the income required to afford them.

The report shows that while the average home price in Ottawa fell by more than $72,000 between January 2022 and January 2023, the amount of money someone needs to make to be able to afford an average home in the city has risen by $8,370.

The Ratehub.ca report says an Ottawa resident needs to make $122,440 per year to afford a home in 2023, compared to $114,070 in 2022.

The main reason for the disparity is a stronger stress test and higher interest rates.

"Home prices are down, but affordability is worse than 12 months ago," said Ratehub.ca co-CEO James Laird in the report.

"With current fixed rates, the stress test is currently around 7.37 per cent, which is over 2 per cent higher than a year ago. The increase in rates is more material than the decrease in home values so far, which means homes are less affordable in nine out of 10 of the cities we looked at compared to a year ago."

The only city where affordability improved was Hamilton, Ont., where the income needed to buy a home fell by $4,350 to $159,100 per year.

Ottawa ranks in the middle of the pack of 10 cities for the income needed to buy a home. Vancouver, Toronto, Victoria, and Hamilton require higher incomes than Ottawa, while Calgary, Montreal, Halifax, Edmonton and Winnipeg require lower incomes.

The year-over-year increase in Ottawa, however, is a decline from the summer and fall. Ratehub.ca's analysis from August 2022 said homebuyers would need to earn at least $129,980 to meet the requirements to obtain a mortgage for the average priced home in the capital, with a 20 per cent down payment. It dropped to $127,900 in October. 

Ratehub.ca said this is a sign that there is some cause for optimism.

"Compared to Ratehub’s October affordability analysis, recent stabilization among both fixed and variable mortgage rates has been enough to turn the dial slightly for buyers’ affordability, with the required income declining in every market except Halifax," it said.

Here is the income required in each of the 10 cities in order to be able to afford an average home in each market, according to Ratehub.ca's most recent analysis.

1. Vancouver: $212,800
2. Toronto: $207,000
3. Victoria: $169,250
4. Hamilton: $159,100
5. Ottawa: $122,440
6. Calgary: $105,680
7. Montreal: $103,560
8. Halifax: $102,260
9. Edmonton: $79,370
10. Winnipeg: $72,500