TORONTO, March 15 /CNW/ - Atlantic Canada's housing affordability
improved across all classes in the fourth quarter of 2006, according to the
latest report released today by RBC Economics.
"Strong household income growth, lower monthly utility bills and a modest
drop in year-end mortgage rates contributed to improve conditions across the
region," said Derek Holt, assistant chief economist at RBC.
RBC's Housing Affordability measure for the Atlantic provinces, which
captures the proportion of pre-tax household income needed for maintaining the
costs of owning a home, stood at 24.8 per cent for both the standard townhouse
as well as for a condo categories, 29.4 per cent for a detached bungalow and
34.4 per cent for a two-storey home.
A detached bungalow in Atlantic Canada remained the most affordable in
the country in the fourth quarter with its cost requirements just shy of
30 per cent. To purchase a home, qualifying income levels still remain at a
healthy $3,500 below median household income for the region. Condos showed the
strongest signs of improvement, with average price changes dipping into
negative territory for the first time in almost two years. Detached bungalows,
two-storey homes and townhouses all witnessed price increases at the end of
The Housing Affordability measure, which RBC has compiled since 1985, is
based on the costs of owning a detached bungalow, a reasonable property
benchmark for the housing market. Alternative housing types are also
presented, including a standard two-storey home, a standard townhouse and a
standard condo. The higher the reading, the more costly it is to afford a
home. For example, an Affordability measure 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.
Also included in the report are housing affordability conditions for
select cities across the country, including St. John's, Saint John, and
Halifax. For these select cities, RBC has used a narrower measure of housing
affordability that only takes mortgage payments relative to income into
account. St. John's and Halifax witnessed improvements in affordability
conditions while Saint John reported a marked deterioration in its two-storey
RBC's Affordability measure for detached bungalows in Canada's largest
cities is as follows: Vancouver 68.5 per cent, Calgary 40.9 per cent, Toronto
42.6 per cent, Montreal 35.3 per cent and Ottawa 30 per cent.
Highlights from across Canada:
- British Columbia: The final quarter of 2006 provided some relief for
B.C. homeowners with affordability improving for the two-storey and
detached bungalow segments. However, condos and townhomes continued a
fifth straight quarter of deterioration. Overall, B.C.'s housing
market should continue to improve over the next year.
- Alberta: Since the start of 2005, housing affordability across Alberta
has been eroding at an aggressive pace. While the most recent quarter
reported another across-the-board deterioration, the pace of erosion
appears to have topped out and has slowed significantly.
- Saskatchewan: For a fifth consecutive quarter, affordability eroded in
three out of four home classes - detached bungalow, townhouse and
condo. Saskatchewan's annual house price gains, which are in the
10 per cent range, outweighed any mortgage rate relief or household
income growth that would have helped offset costs.
- Manitoba: After declining affordability in the first half of 2006,
Manitoba saw a marked improvement for the second half of the year. The
strongest improvement came from the condo sector, reversing much of
the deterioration that occurred in the early part of 2006.
- Ontario: As Ontario's housing market continued to cool, affordability
improved across all classes. Softer price growth, a decline in
mortgage rates and lower utility bills combined to bring monthly
payments down by one to two per cent for all four housing segments.
- Quebec: Led by improvement in two-storey homes, housing affordability
recovered significantly for the first time in over a year as the long-
anticipated soft landing continues to unfold. Supply and demand
fundamentals in Quebec's housing market are cooling off in tandem and
the effects are overflowing to improve affordability conditions for
The full RBC Housing Affordability report is available online, as of
8 a.m. E.D.T. today at www.rbc.com/economics/market/pdf/house.pdf.
For further information:
For further information: Derek Holt, RBC Economics, (416) 974-6192;
Jackie Braden, RBC Media Relations, (416) 974-2124