The market may be cooling, but the cost of owning a home in Toronto is still red hot.

With income rates expected to stay stagnant and interest rates set to increase, carrying a mortgage will be more expensive this year.

READ: Cost Of Renting In Toronto Expected To Go Up 11 Per Cent This Year

According to RBC, the cost of owning a home in Toronto will account for 79 per cent of the average Torontonian's income.

Though the average price of a Toronto home fell last year, RBC says prices will rise 0.5 per cent in 2019. They also predict a 5.6 per cent increase in sales this year.

The whole scenario paints a daunting picture for potential buyers.

READ: GTA Home Sales Down 16 Per Cent Over 2018: TREB Report

“Buyers in Vancouver, Toronto and Victoria needed between two and three times the median household income to qualify to purchase an average home in the third quarter,” Craig Wright, Senior Vice-President and Chief Economist, RBC said in a statement. “Poor affordability has made it nearly impossible for some buyers - often young households - to enter these housing markets.”

With the price of detached homes well out of reach for many Canadians, buyers have shifted to the condo market. But, as demand runs low, even condo prices have gone up considerably. In 2018, the average cost of a condo in Canada increased 3.6 per cent. The cost of a single-family detached home increased by only 1.2 per cent at the same time.

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According to the RBC report, the qualifying income to by a home in Toronto is now $167,000. In 2016, the median household income in Toronto was $75,270. Back then, the qualifying income was much lower too, about $64,000 lower.

The jump can be attributed to the Mortgage Stress Test which was implemented at the start of 2018. In Toronto, the test added an additional $27,000 of income needed to qualify for a mortgage on an $857,000 home.

If you were hoping to buy in 2019, the outlook isn't good. RBC says that even if prices were lower and household income was higher, the two interest rate hikes that are expected this year will likely put affordable housing even further out of reach.

Personal Finance