TORONTO, Aug. 28, 2014 /CNW/ - Quebec's housing affordability improved
across the board in Q2 despite fairly lacklustre market activity in the
province, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
The slide in Quebec's housing market activity since early 2012
stabilized in the second quarter of 2014 with home resales rising
slightly by 0.8 per cent from the first quarter. This followed declines
in six of the previous eight quarters.
"While this small uptick in housing activity in Quebec is encouraging
relative to the recent past, it was still the weakest Q2 level we've
seen since 2006 in the province," said Craig Wright, senior
vice-president and chief economist, RBC. "At the same time, there was
an increase in the supply of homes for sale, which provided plenty of
choice to buyers and kept a lid on price increases. Owning a home in
Quebec has become the most affordable in years."
The RBC housing affordability measures, which capture the province's
proportion of pre-tax household income that would be needed to service
the costs of owning a home at current market values in Quebec, improved
for all housing types in the second quarter of 2014 (a decline in the
measure represents an improvement in affordability). RBC's measures
fell by 1.1 percentage points to 33.4 per cent for detached bungalows,
by 1.8 percentage points to 41.9 per cent for two-storey homes and by
0.9 percentage points to 25.7 per cent for condominium apartments.
Montreal-area housing - a soft sell
In the second quarter, the number of homes sold was the lowest for this
particular period of the year since 2000, coming in more than 17 per
cent below the 10-year average. The RBC report finds that this muted
demand came at a time when more homes were available for sale,
"Like the rest of Quebec, Montreal homebuyers gained greater power in
setting prices in Q2," said Wright. "With properties appreciating only
modestly, lower mortgage rates provided greater affordability relief in
the Montreal area than in any other major market in Canada."
RBC's affordability measures fell noticeably across all housing types,
dropping between 1.4 and 2.6 percentage points.
"Such sizeable improvement in affordability might sow the seeds for a
revival in activity during the second half of this year - indeed, there
were already some early signs that resales started to move up during
the summer months," added Wright.
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 calculated 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.
Manitoba: new home listings surge; affordability plays largely neutral
The big housing market story in Manitoba was a surge of homes being
offered for sale with new listings growing to levels almost 14 per cent
above where they were a year ago. RBC's affordability measures fell
between 0.5 and 1.5 percentage points but remained close to long-run
averages, suggesting that affordability likely plays a neutral role in
home buying decisions in the province.
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.
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