Remains the priciest province in which to own a home
Vancouver remains the least affordable market in Canada
TORONTO, Feb. 25, 2013 /CNW/ - While it remains the country's priciest
province in which to own a home, British Columbia's housing
affordability saw noticeable improvements for the second consecutive
quarter, in the fourth quarter of 2012, according to the latest Housing Trends and Affordability Report released today by RBC Economics Research.
"Affordability improvements across most housing types in the fourth
quarter were welcome news to prospective buyers in British Columbia,"
said Craig Wright, senior vice-president and chief economist, RBC.
"Still, the market has a long way to go before affordability reaches
less stressful levels."
The RBC report notes that poor affordability levels were a key factor
playing into the sharp 11.9 per cent drop in provincial home resales
last year. B.C. was one of only two markets in Canada to experience a
decline in activity. The province's home prices were also down between
0.8 per cent and 4.0 per cent from 2011.
"Much of the cooling that took place in B.C. is owed to the
Vancouver-area, where affordability tensions are by far the greatest,"
RBC's housing affordability measures, which capture the province's
proportion of pre-tax household income needed to service the costs of
owning a home at market values, declined across two out of three
housing types tracked in the fourth quarter (a decrease in the measure
represents an improvement in affordability).
The RBC measure fell for the benchmark detached bungalow by 1.0
percentage points to 66.4 per cent and for condominium apartments by
1.1 percentage points to 33.4 per cent. The two-storey home category
experienced a small increase of 0.4 percentage points to 72.7 per cent
but this followed a substantial decline of 3.2 percentage points in the
Market correction makes Vancouver slightly less unaffordable
The Vancouver-area market was in correction mode in 2012, with home
resales falling 23 per cent to the lowest level in 12 years (excluding
the recession in 2008), tipping the home price scale in favour of
"Following a run-up over the previous nine years, Vancouver home prices
fell across the board in 2012 and, by the fourth quarter, the area was
the only major market showing year-over-year price declines," Wright
explained. "While Vancouver still holds the title as least affordable
market in Canada, the softening in activity helped to significantly
ease homeownership costs in the latter half of 2012 and made the market
slightly less unaffordable."
Fourth quarter RBC affordability measures for Vancouver fell by 2.6
percentage points for detached bungalows, by 1.2 percentage points for
condominium apartments and by 0.8 percentage points for two-storey
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities is as follows: Vancouver 82.2 per cent (down
2.6 percentage points from the previous quarter); Toronto 52.8 per cent
(down 0.4 percentage points); Montreal 39.3 per cent (down 0.9
percentage points); Ottawa 38.8 per cent (down 0.5 percentage points);
Calgary 38.1 per cent (up 0.2 percentage points) and Edmonton 30.7 per
cent (down 0.1 percentage points).
The RBC Housing Affordability Measure, which has been compiled since
1985, is based on the costs of owning a detached bungalow (a reasonable
property benchmark for the housing market in Canada) at market value.
Alternative housing types are also presented, including a standard
two-storey home and a standard condominium apartment. The higher the
reading, the more difficult it is to afford a home at market values.
For example, an affordability reading of 50 per cent means that
homeownership costs, including mortgage payments, utilities and
property taxes, would take up 50 per cent of a typical household's
monthly pre-tax income.
Highlights from across Canada:
Alberta: vibrant market bolstered by attractive affordability
Brisk demand for the province's housing in 2012 was supported by a
strong provincial economy, accelerating population growth and
attractive affordability. Further improvement was registered in the
fourth quarter with measures falling between 0.1 and 0.2 percentage
Saskatchewan: affordability conditions buck the national trend
Tight market conditions at the beginning of 2012 had a lasting impact on
home prices in Saskatchewan, which climbed at some of the faster paces
in Canada in the fourth quarter. Rising property values caused
affordability to deteriorate in the fourth quarter with measures
increasing between 0.5 and 1.1 percentage points.
Manitoba: market vigour unhindered by slight affordability deterioration
Manitoba's housing market registered a banner year in 2012 with a record
14,000 existing homes sold, indicating that housing affordability
levels had little dissuasive effect on homebuyers in 2012. Although
measures for detached bungalows and condominiums deteriorated in the
fourth quarter, measures for two-storey homes remained unchanged. RBC's
measures for Manitoba continued to rank slightly above their long-term
average, suggesting that any affordability strain is likely minimal at
Ontario: affordability largely improves, tempering overall market conditions
The tightness that characterized Ontario's housing market in the early
part of 2012 gave way and a more balanced market was observed in the
second half of 2012, improving overall affordability conditions in the
province. RBC's measures inched lower by 0.1 and 0.3 percentage points
for the detached bungalow and condominium apartment, respectively,
while the measure for two-storey homes rose marginally by 0.1
Quebec: generally improving affordability tone is sustained
Quebec's housing affordability improved, for the most part, for the
third quarter in a row in the fourth quarter, yet this did little to
stimulate homebuyer demand as resale activity continued to cool in the
province. RBC measures fell for two-storey homes (by 1.1 percentage
points) and detached bungalows (by 0.3 percentage points), but rose for
condominium apartments (by 0.4 percentage points).
Atlantic Canada: housing continues to be affordable
Affordability in the Atlantic region received another boost in the
fourth quarter, with RBC measures falling for two-storey homes (by 1.0
percentage points) and detached bungalows (by 0.5 percentage points),
keeping levels well below their respective national averages. The
measure for condominium apartments rose modestly by 0.3 percentage
points, though this followed a more sizable drop in the previous
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at rbc.com/economics/market/.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416 974-6192
Elyse Lalonde, Manager, Communications, RBC Capital Markets, 416 842-5635