TORONTO, Feb. 25, 2014 /CNW/ - Owning a home in Alberta became slightly
more affordable across most housing categories in the fourth quarter of
2013, and the province remains one of Canada's most affordable markets,
according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
Alberta's strong housing market rally since early 2010 took a breather
in the fourth quarter, as home resales slipped 5.0 per cent from the
previous quarter. RBC says this step back reversed only a small portion
of the steady gains witnessed earlier in 2013, and that resales
remained at a comfortable 12.3 per cent above year-ago levels.
"In the final months of 2013, Alberta's housing market cooled a little
and owning a home in the province became slightly more affordable,
continuing to compare favourably against both national and provincial
historical averages," said Craig Wright, senior vice-president and
chief economist, RBC. "Looking ahead this year, we expect that
constructive affordability conditions, a booming provincial economy and
strong population growth will continue to fuel homebuyer demand in the
The RBC housing affordability measures, which capture the proportion of
pre-tax household income needed to service the costs of owning a home
at market values, eased in the fourth quarter for two of three
categories tracked (a decline in the measure represents improvement in
RBC's affordability measures declined by 0.5 percentage points to 34.6
per cent for two-storey homes and by 0.2 percentage points to 32.7 per
cent for bungalows. The measure for condominium apartments, on the
other hand, edged slightly higher by 0.1 percentage points to 19.9 per
Strong household incomes in Calgary generate attractive affordability
RBC notes that homebuyer demand in Calgary continues to benefit from
attractive affordability levels, a hot labour market, a fast-rising
population and a booming provincial economy.
Calgary's resale activity fell 5.3 per cent in the fourth quarter,
though RBC says the broad trend for this market remains very strong.
Resales made considerable gains in the first three quarters of 2013,
such that levels during the fourth quarter were a solid 15 per cent
higher than during the same period a year earlier.
"Calgary is one of the few markets in Canada where affordability
conditions look better than their historical norms, keeping housing in
the city attractive relative to other major markets across the
country," added Wright. "This is not to say that home prices are cheap
in the area - they are in fact the third-highest in the country after
Vancouver and Toronto - it is instead a reflection of just how strong
household incomes are in Calgary. "
In the fourth quarter, RBC measures for Calgary eased by 0.3 percentage
points to 34.2 per cent for two-storey homes and by 0.2 percentage
points to 33.8 per cent for bungalows. The measure for condominiums
inched slightly higher by 0.1 percentage points to 20.0 per cent for
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in the fourth quarter of 2013 is as follows:
Vancouver 81.6 (down 2.3 percentage points from the previous quarter);
Toronto 55.6 (up 0.1 percentage points); Montreal 38.8 (unchanged);
Ottawa 36.7 (down 0.4 percentage points); Calgary 33.8 (down 0.2
percentage points); Edmonton 33.3 (up 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.
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:
Saskatchewan's affordability trends sideways
Housing affordability in the province continued to play a predominantly
neutral role in home-buying decisions with levels standing close to
historical norms. RBC's affordability measures declined 1.1 percentage
points for two-storey homes and 0.2 percentage points for bungalows.
The measure for condominiums was up by 0.4 percentage points.
Manitoba's surge in listings lends a hand to affordability
A surge in newly listed homes for sale weakened demand-supply conditions
in Manitoba during the second half of 2013, which ultimately helped to
improve affordability with RBC measures for two-storey homes and
bungalows slipping by 1.1 percentage points and 0.6 percentage points,
respectively. The measure for condominiums rose by 0.8 percentage
Ontario's affordability picture remains largely unchanged
RBC's affordability measures for Ontario eased by 0.1 percentage points
for both bungalows and two-storey homes and stayed flat for
condominiums in the fourth quarter of 2013. Owning a single-detached
home at market value in the province continues to take a larger share
of household income compared to the historical average despite marginal
improvements for the first time in a year.
Quebec's affordability conditions little changed from the third quarter
The only observable variation in affordability conditions in Quebec
during the fourth quarter was in the two-story homes category, with
RBC's measure inching higher by 0.2 percentage points. The measures for
bungalows and condominium apartments remained unchanged. All measures
continued to stand near their long-run averages.
Atlantic Canada retains decent affordability conditions
Housing affordability in the region remained at generally neutral levels
in the fourth quarter, and still compared favourably against the
majority of markets across Canada. RBC's measures fell by 0.6
percentage points for two-storey homes and by 0.1 percentage points for
bungalows. The measure for condominiums rose by 0.2 percentage points.
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at rbc.com/economics/economic-reports/canadian-housing-forecast.html.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416-842-5635