Atlantic Canada's housing market expected to soften in 2008, says RBC Economics



    HALIFAX, Jan. 24 /CNW/ - After a year of deteriorating affordability,
Atlantic Canada's housing market is expected to soften in 2008 as construction
activity gears down, according to a new housing report issued today by RBC
Economics.
    "Last year, the region's housing affordability had deteriorated as strong
house price gains and rising mortgage rates chipped away at conditions," said
Derek Holt, assistant chief economist, RBC. "House price growth should
moderate from the 10 per cent range last year to the mid single-digit range in
2008, while both fixed and variable mortgage rates are likely to witness
significant decreases."
    The RBC Housing Affordability report for Atlantic Canada, which measures
the proportion of pre-tax household income needed to service the costs of
owning a home, deteriorated across all four classes last quarter as the
benchmark detached bungalow moved to 32 per cent, the standard townhouse to 27
per cent, the standard condo to 27 per cent and the standard two-storey home
to 38 per cent.
    Among the Atlantic provinces, housing markets in Nova Scotia and New
Brunswick are expected to put in a stronger performance, as a series of major
capital projects come under construction, spurring new job opportunities and
growth in the region. More employment opportunities in the region should help
partially offset the migration outflows (mostly to Western Canada) witnessed
over the last few years.
    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 measure, the more costly it is to afford a home. 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.
    Also included in the report are housing affordability conditions for a
broader sampling of cities, including St. John's, Saint John, and Halifax. For
smaller cities, RBC has used a narrower measure of housing affordability that
only takes mortgage payments relative to income into account.
    RBC's Affordability measures for a detached bungalow for Canada's largest
cities are as follows: Vancouver, 72 per cent, Calgary, 46 per cent, Toronto,
46 per cent, Montreal, 37 per cent and Ottawa, 32 per cent.
    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 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: Housing affordability reached into uncharted
        territory late last year as affordability deteriorated to its worst
        level since 1985 when RBC started tracking conditions. Modest
        improvements are expected for 2008.

    -   Alberta: Many prospective homebuyers were priced out of the market
        last year as housing affordability conditions eroded, pushing markets
        into unsustainable territory. With a softer influx of migrants, the
        housing market is poised for a significant slowdown and improved
        affordability.

    -   Saskatchewan: Housing affordability deteriorated sharply across all
        home segments last year as a sudden influx of migrants strained
        existing housing capacity. In 2008, housing affordability conditions
        are expected to stabilize.

    -   Manitoba: The province's housing market is still running at full
        tilt. Affordability should improve as rising costs start to weigh on
        demand and help rebalance the market in 2008.

    -   Ontario: Income growth is expected to cool amidst toughening economic
        conditions in the province. On balance, our affordability forecast in
        2008 points to overall improving conditions as mortgage rates drift
        lower and price gains moderate even further.

    -   Quebec: Housing affordability continued to deteriorate last year.
        Stable and modest price gains combined with some mortgage rate relief
        this year should translate into an overall improvement in
        affordability conditions across all four home segments in 2008.
    

    The full RBC Housing Affordability report is available online, as of
    8 a.m. E.S.T. today at www.rbc.com/economics/market/pdf/house.pdf.





For further information:

For further information: Derek Holt, RBC Economics, (416) 974-6192; Amy
Goldbloom, RBC Economics, (416) 974-0579; Jackie Braden, RBC Media Relations,
(416) 974-2124


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890