TORONTO, Aug. 28, 2014 /CNW/ - Housing affordability in Manitoba
improved slightly in the second quarter of 2014 though it continued to
play a predominantly neutral role on homebuyer demand in the province,
according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research. RBC says that in Q2 the larger
narrative was the strengthening supply of homes for sale in the
"Manitoba's housing activity bounced back as expected in the second
quarter from the slowdown caused by frigid temperatures in the first
quarter," said Craig Wright, senior vice-president and chief economist,
RBC. "The bigger story though was a surge of homes for sale. New
listings - which have been on a steady upward trend for some time -
rose to levels almost 14 per cent above where they were a year ago."
The increase in homes available for sale coincided with a wave of
completions of new housing units in the Winnipeg area, which RBC says
represents between 85 per cent and 90 per cent of the Manitoba market,
and far exceeded a 2.6 per cent increase in resales.
"This is the latest such divergence that resulted in a notable loosening
of demand-supply conditions since the end of 2012, and more recently,
limited price advances," added Wright.
Despite relatively affordable conditions, levels remain close to
historical norms in the province. RBC 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,
decreased for all three categories in the second quarter of 2014 (a
decline in the measure represents improvement in affordability).
RBC's affordability measures eased by 0.9 percentage points to 36.3 per
cent for detached bungalows, by 0.5 percentage points to 23.7 per cent
for condos and by 1.5 percentage points to 37.0 per cent for two-storey
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in the second quarter of 2014 is as follows:
Vancouver 81.8 (down 0.3 percentage points from the previous quarter);
Toronto 55.9 (down 0.2 percentage points); Montreal 37.3 (down 1.6
percentage points); Ottawa 36.0 (down 0.4 percentage points); Calgary
33.6 (down 0.8 percentage points); Edmonton 31.7 (down 1.1 percentage
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.
It is important to note that RBC's measure is designed to gauge
ownership costs associated with buying a home at present market values.
It is not a representation of the actual costs incurred by current
owners, the vast majority of whom have bought in the past at
significantly different values than those prevailing in the latest
Highlights from across Canada:
British Columbia: affordability broadly improves
Housing affordability in the province improved across the board in the
second quarter, with two-storey homes and condos reaching their most
attractive levels since late 2009. RBC's affordability measures for
B.C. fell between 0.9 and 2.0 percentage points. Still, owning a home
at market price in an area such as Vancouver continued to be very
difficult for an average household to afford.
Alberta: housing affordability remains attractive
Escalating prices in the province were largely taken in stride by
Alberta homebuyers in Q2 as lower mortgage rates and solid growth in
household incomes provided offset. Affordability in the province
improved modestly with RBC measures easing between 0.2 and 0.9
Saskatchewan: homebuyers face little undue affordability pressure
The provincial housing market rebounded strongly in the second quarter
with home resales jumping to a new record-high. At the same time, RBC's
affordability measures for Saskatchewan fell between 1.3 and 0.8
percentage points, and stood close to their historical averages.
Ontario: homebuyers undisturbed by affordability strains
Housing affordability changed very little in Ontario in the second
quarter and homebuyers did not appear to be overly concerned by the
fact that affordability remained somewhat stretched for single-family
homes. Lower rates were the main factor contributing to marginal
declines in RBC's measures for Ontario, which edged lower between 0.1
and 0.2 percentage points.
Quebec: improved affordability helps halt housing market slide
Quebec's housing market activity, which had been falling since early
2012, stabilized in Q2. Home resales rose modestly and the supply of
homes for sale grew. Second quarter affordability measures for the
province eased for all housing types - between 0.9 and 1.8 percentage
points. This improvement in affordability likely helped stabilize the
market at the margin in the latest quarter.
Atlantic Canada: attractive affordability conditions
The region's housing affordability conditions improved quite noticeably
in the second quarter thanks to lower mortgage rates and subdued price
pressures. RBC's measures for Atlantic Canada dropped between 0.9 and
1.8 percentage points.
The full RBC Housing Trends and Affordability report is available online, as of 8 a.m. ET today.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416-842-5635