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The moon rises behind the skyline and financial district in Toronto, November 25, 2015.

/Mark Blinch/Reuters

Toronto is outpacing Vancouver as the Canadian city where residents struggle the most to afford their housing costs, according to new census data unveiled Wednesday.

Home affordability worsened in the Toronto region following several years of sharp increases in house prices and rent levels, Statistics Canada reported, with 33.4 per cent of Toronto households spending more than 30 per cent of their income on housing costs in 2016, an increase from 31.8 per cent in 2011.

Although house prices are higher in Vancouver than in Toronto, the census data showed 32 per cent of households in metropolitan Vancouver paid more than 30 per cent of their income toward shelter costs in 2016, a drop from 33.5 per cent in 2011. The census measure of shelter costs includes payments for mortgages, rent, electricity, heat, water, property taxes, other municipal services and condominium fees.

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Census 2016: Canada getting more diverse as immigration, Indigenous population increase

Shaun Hildebrand, senior vice-president at Urbanation, which tracks data in the condominium sector, said the affordability gap between Canada's two most expensive cities is a result of the higher proportion of people who rent in Vancouver than Toronto. Renters typically have lower housing costs than owners, he said, and rents in Vancouver are lower on average than in Toronto, while incomes are similar.

Vancouver also has a higher proportion of home owners who don't have mortgages than Toronto, he said, while Toronto also has higher property taxes and heating costs.

Mr. Hildebrand said Vancouver is building far more new rental units than Toronto, making it easier for residents to find good-quality rental options as housing prices soar.

"There's obviously more on the policy side that's helping to encourage rental development in Vancouver versus Toronto," he said.

Frank Clayton, senior research fellow at the Centre for Urban Policy and Land Development at Ryerson University, said the 2011 data may not be as statistically valid for comparison to 2016 because Canada did not do a full census in 2011, but instead conducted a voluntary national household survey.

The 2006 census results were closer to the 2016 numbers, he said, with 33.3 per cent of Toronto residents paying more than 30 per cent of their incomes for housing in 2006, compared with 32.9 per cent of Vancouver residents. The affordability gap between the two cities widened between 2006 and 2016, however.

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Diana Petramala, senior researcher at Ryerson's urban policy centre, said Vancouver's higher rate of millennial renters between the ages of 25 and 34 appears to be the biggest reason for the gap, with 36 per cent of millennials in Vancouver paying more than 30 per cent of their income in housing costs, compared with 42 per cent of millennials in Toronto.

On a national basis, average home affordability in Canada improved in 2016 compared with 2011, with 24.1 per cent of households paying more than 30 per cent of their total monthly income on shelter costs, down from 25.2 per cent in 2011.

Although home ownership levels remain relatively high in Canada compared with many other countries, rising home prices and changing attitudes about renting have combined to slowly reduce the number of Canadians who own their own homes, with home ownership nationally falling to 67.8 per cent in 2016 from 69 per cent in 2011.

The slight dip in ownership is seen in most major cities. In Vancouver, 63.7 per cent of households owned their own homes in 2016 compared with 65.5 per cent in 2011, while Toronto saw home ownership levels fall to 66.5 per cent from 68.3 per cent in 2011.

Montreal, meanwhile, saw ownership rise slightly to 55.7 per cent from 55 per cent in 2011, although the city continues to have the lowest rate of home ownership of any large city in Canada.

The national census results also show millennials are less likely to own homes than baby boomers were at the same age. Among millennials who were 30 years old in 2016 and lived in their own home, 50.2 per cent were owners, compared with 55.5 per cent of baby boomers who were 30 in 1981.

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Phil Soper, chief executive officer of realty firm Royal LePage, said his firm's surveys of buying intentions show many millennials still aspire to own houses and plan to buy in the future, but it will take longer than their parents' generation because of higher costs. He believes the two generations may look different at age 30, but will seem more similar as millennials age.

"This is not a shift in ownership, but rather a delay in ownership to a later age," he said.

The census also showed seniors are more likely to still own their own home now than in the past, with 74.6 per cent of Canadians over 65 owning their own homes in 2016 compared with 72.2 per cent in 2006.

Ryerson's Mr. Clayton said the increase is largely a result of the greater level of home ownership in the baby boomer generation, which is turning into higher home ownership levels as they become seniors.

Drawing Conclusions: Understanding the new stress test for uninsured mortgages

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