TORONTO, Aug. 28, 2014 /CNW/ - Alberta's housing market continued on a
roll in the second quarter and homebuyers benefited from improved
affordability, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
Home resales increased for the fifth time in the past six quarters,
registering the fastest quarterly advance in nearly four years, and the
total for that period was the second-best on record (unadjusted for
seasonality) in the province. RBC says that the good news for
homebuyers was there was a meaningful increase in the supply of homes
for sale in Q2 with new listings rising 12 per cent over the first
quarter to a multi-year high.
"Alberta has been a seller's market since the latter part of 2012, which
led to rapid price increases in certain pockets such as Calgary over
the past year - the increase in supply has helped ease some of this
ongoing market tension," said Craig Wright, senior vice-president and
chief economist, RBC. "Still, it should be flagged that Alberta
homebuyers remained relatively unscathed by escalating prices as a
recent drop in mortgage rates and solid household income growth
provided offset - this kept affordability relatively attractive."
The 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, eased modestly for all housing types in
the second quarter (a decrease in the measure represents an improvement
RBC's affordability measures eased by 0.9 percentage points to 33.4 per
cent for two-storey homes, by 0.6 percentage points to 31.9 per cent
for bungalows and by 0.2 percentage points to 20.1 per cent for
Calgary's housing activity soaring but affordability remains under
A surge in home resales in the second quarter confirmed that Calgary's
housing market is soaring - resales set a new high for any Q2 on
record, rising almost 29 per cent above the 10-year average. RBC says
that this isn't surprising considering how strongly underlying housing
demand is being supported by a booming provincial economy, rapid
population growth and attractive affordability.
"The rate that home prices have increased in Calgary has been the
fastest in Canada in the past year, though the impact on homebuyers'
ability to own a home has been fully neutralized by solid income gains
and recent drops in mortgage rates," said Wright. "A gush of new
listings in the second quarter may help ease the current market
tightness and soften price gains going forward."
The report indicates that the latest readings on Calgary's housing
affordability still compare favourably relative to their historical
norms. RBC's measures edged lower for all housing types, moving down
1.0 percentage points to 33.9 per cent for two-storey homes, down 0.8
percentage points to 33.6 per cent for bungalows and down 0.5
percentage points to 19.8 per cent for condominiums.
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.
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.
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