A new report showed that home prices need to drop by more than $500,000 for Millennials to be able to buy a home in Ontario.

Generation Squeeze, a charity organization advocating for intergenerational fairness in the country, also recently released a 56-page report titled "Straddling the Gap 2022," which examines the disparity between housing prices and earnings across the country.

The study analyzed what should be "Canada's main target" for home prices by looking at the gap between earnings and average home prices from 1976 to 2021, which was the last year available to obtain data from the Canadian Real Estate Association (CREA).

After analyzing CREA data and comparing it with Statistics Canada data on annual income, the report concluded that prices should "pause for many years to come – or even continue to decline moderately."

The report also stated that "the number of working years required to save [for] a 20% down payment on average home prices has grown in alarmingly many ways in many areas."

Throughout Ontario, average home prices were $900,000 lower last year. Meanwhile, the average income for Ontarians aged 25 to 34 remained roughly the same for decades, averaging about $50,000 per year. According to the latest data from StatsCan, the annual income was $50,800 in 2020.

For Millennials to be able to buy a home in the province, the report says that average home prices must drop by $530,000, more than 60% of the market value last year, to afford a mortgage covering 80% of the value.

Or, Millennials in Ontario would need to earn $137,000 per year, nearly $85,000 more than they currently earn on average.

Those planning to own a home in the GTA will also have to save for an average of 27 years to pay the same down payment on an average-priced house, which is 10 years longer compared to the average time across Canada.

The average annual income remained around $50,000 in the area, with StatsCan revealing that people aged 25 to 34 in the GTA earned on average $51,600 in 2020. Meanwhile, the average housing price in the area rose to $1.1 million.

According to the report, these prices must drop by more than $750,000 for this age group to afford a mortgage covering 80% of the home's value at current interest rates.

Additionally, the report pointed out that "typical full-time earnings need to increase to $172,000 per year – more than triple current levels."

Rent is also high for those who cannot buy, with the report indicating it costs $20,148 annually for a two-bedroom apartment in the GTA in 2021.

With the amount Millennials earn annually on average, rent takes up about 40% of their income. However, home prices in the GTA are expected to decline slightly next year.

According to Re/Max Canada’s 2023 housing market forecast, prices are expected to drop by nearly 12%, to just over one million dollars.