Montreal's affordability remains slightly strained but shows improvement
TORONTO, Nov. 25, 2011 /CNW/ - Following back-to-back deteriorations,
Quebec's housing affordability improved across all housing types in the
third quarter, according to the latest Housing Trends and Affordability Report released today by RBC Economics.
"With the possible exception of two-storey homes, affordability measures
remain well within historical norms in Quebec," said Robert Hogue,
senior economist, RBC. "Still, this mostly 'neutral' affordability
picture has had only a muted effect on housing demand in the third
quarter. Home resales barely rose, which is likely attributable to a
sluggish provincial job market that has persisted since early summer."
RBC's housing affordability measures for Quebec decreased across all
housing types in the third quarter of this year. RBC's measures capture
the province's proportion of pre-tax household income needed to service
the costs of owning a home at market values (a decline represents a
move towards greater affordability). The measure for the standard
two-storey home edged 0.6 percentage points lower from the previous
quarter to 43.1 per cent. The measure for the benchmark detached
bungalow fell by 1.4 percentage points to 33.5 per cent and the
standard condominium inched lower by a mere 0.1 percentage points to
27.7 per cent.
"For its part, the Montreal-area market saw some of the bigger
improvements in affordability of all major Canadian cities in the third
quarter and remained significantly more affordable than Toronto and
Vancouver," added Hogue. "Nonetheless, affordability levels in Montreal
continue to be somewhat worse than historical norms in the area - this
will likely exert some downward pressure on local housing demand."
RBC's affordability measures decreased in the Montreal area for
two-storey homes (down 2.3 percentage points to 52.2 per cent) and
detached bungalows (down 1.3 percentage points to 40.9 per cent), but
increased marginally for condominiums (up 0.1 percentage points to 32.6
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities is as follows: Vancouver 90.6 per cent (down
1.5 percentage points from the previous quarter), Toronto 52.1 per cent
(up 0.1 percentage points), Montreal 40.9 per cent (down 1.3 percentage
points), Ottawa 40.8 per cent (down 0.6 percentage points), Calgary
37.6 per cent (up 0.5 percentage points) and Edmonton 33.2 per cent
(down 0.6 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. Alternative
housing types are also presented, including a standard two-storey home
and a standard condominium. The higher the reading, the more costly it
is to afford a home based on going market values. For example, an
affordability reading of 50 per cent means that homeownership costs,
including mortgage payments, utilities and property taxes, take up 50
per cent of a typical household's monthly pre-tax income.
Highlights from across Canada:
British Columbia: The combination of moderate declines in mortgage rates and softer prices
for some housing types made it slightly more affordable to own a home
in British Columbia in the third quarter. The RBC Affordability
measures for British Columbia decreased between 0.3 and 1.2 percentage
points in the quarter, but remain well above historical norms. The poor
affordability picture in British Columbia will continue to weigh on
local housing demand.
Vancouver continues to experience sky-high home prices, even though the
RBC affordability measures fell between 1.5 percentage points and 0.8
percentage points. Current market prices continue to weigh on local
homebuyers, as home ownership costs remain well above historical norms.
Alberta: Impressive gains in Alberta's economy contributed to a stronger
provincial housing market in the third quarter of this year. Home
resales and housing starts reached their highest levels in over a year,
thanks to renewed demand for housing in the province. RBC affordability
measures for Alberta remained mostly unchanged and the lowest among the
provinces in the third quarter.
Affordability measures in Calgary deteriorated slightly for most housing
types in the third quarter, rising between 0.2 and 0.5 percentage
points. Nonetheless, Calgary-area homebuyers continue to benefit from
attractive affordability, which remained the best among Canada's major
Saskatchewan: In the third quarter, there was widespread improvement in housing
affordability in Saskatchewan. RBC measures fell for all housing types
between 0.8 and 0.9 percentage points, reversing part of the increases
from the previous quarter. Home resales picked up significantly in the
province, with strong gains registered in Saskatoon and Regina. The
Saskatchewan housing market will continue to be well-supported by
strong economic growth in the coming year.
Manitoba: Housing affordability continues to be attractive in Manitoba, showing
some of the most significant improvements in the country in the third
quarter. The RBC measures for two-storey homes fell 1.5 percentage
points, while the measures for detached bungalows declined by 1.2 per
cent and for condominium apartments by 0.8 percentage points.
Homebuyers took advantage of the greater affordability in the third
quarter and boosted home resales by 5.3 per cent.
Ontario: Ontario's housing affordability experienced very little change in the
third quarter of 2011. Condominium apartments were the only housing
type to see any movement, with the RBC measure decreasing by a mere 0.1
percentage point. Affordability in Ontario stands just slightly worse
than the historical average in the province. Home resales in Ontario
increased at a robust 3.8 per cent rate. Market activity in Ontario is
balanced at the moment, and home prices are increasing at a steady yet
moderate pace. The number of homes for sale in Ontario is on the rise,
which will likely slow the pace of property appreciation in the period
The Toronto area remains a sellers market even as RBC measures clearly
stand above long-term averages for the area. In the third quarter,
measures for Toronto were little changed, increasing by a mere 0.1
percentage point for detached bungalows, declining by 0.3 percentage
points for two-storey homes and staying flat for condominiums.
Ottawa measures decreased over all housing types in the third quarter
from 0.2 to 0.6 percentage points. The earlier cooling in market
activity in the area has almost entirely reversed in the latest period,
as home resales rebounded by eight per cent.
Atlantic Canada: Atlantic Canada's housing market continues to be among the most
affordable in Canada, with further modest improvements in the third
quarter: the RBC measures eased between 0.4 and 0.6 percentage points.
Although many markets in New Brunswick have displayed signs of cooling
in the last two quarters amid deterioration in the province's labour
market, overall, home resales increased marginally in the region. With
slow economic growth projected in Atlantic Canada next year, housing
trends are likely to remain largely stable in the region.
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at www.rbc.com/economics/market/.
For further information:
Robert Hogue, RBC Economics Research, 416-974-6192
Elyse Lalonde, Media Relations, RBC, 416-974-8810