TORONTO, Aug. 31, 2015 /CNW/ - Persistent price stagnation in large
pockets of Atlantic Canada led to further improvements in housing
affordability during the second quarter of 2015, according to the
latest Housing Trends and Affordability Report issued today by RBC Economics Research.
Despite home resales rebounding in New Brunswick (up 4.4 per cent) and
Prince Edward Island (up 13.5 per cent) from weather-affected levels in
the first quarter, activity fell further in Nova Scotia (down 2.9 per
cent), and in Newfoundland and Labrador (down 4.0 per cent). RBC says
the situation was particularly grim in Halifax, where resales fell for
a third straight quarter to a 17-year low amid a surge in new listings
- leading to sharp deterioration in demand-supply conditions in the
"Still-soft demand-supply conditions in many parts of Atlantic Canada
continued to weigh on home prices and drive further declines in home
ownership costs; however, the persistent price stagnation throughout
the region has led to improved affordability measures," said Craig
Wright, senior vice-president and chief economist, RBC. "With the
region's measures among the country's lowest and below their long-run
average, affordability is unlikely contributing to the softness in
housing demand and is more likely to be a favourable factor. The bigger
issues in the region are weak labour markets and poor demographics."
The RBC Housing Affordability measure captures the proportion of pre-tax
household income that would be needed to service the cost of owning a
specific category of home at current market value. Adding to the string
of declines registered since late 2013, RBC's measures for Atlantic
Canada in the second quarter fell across all housing types - condos
decreased by 0.7 percentage points to 24.1 per cent, two-storey homes
decreased by 0.5 percentage points to 33.8 per cent, and bungalows
decreased by 0.3 percentage points to 29.1 per cent. A decrease in the
measure represents an improvement in affordability.
During Q2 2015, national affordability measures rose by 0.7 percentage
points to 43.3 per cent for bungalows and by 0.4 percentage points to
48.3 per cent for two-storey homes. The measure for condominiums
remained unchanged at 27.1 per cent.
RBC's Housing Affordability measure for the benchmark detached bungalow
in Canada's largest cities in Q2 2015 is as follows: Vancouver 88.6 (up
3.0 percentage points from Q1 2015); Toronto 59.4 (up 2.1 percentage
points); Montreal 36.0 (down 1.2 percentage points); Ottawa 35.4
(unchanged); Calgary 32.4 (down 0.4 percentage points); Edmonton 32.5
(down 0.4 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:
British Columbia: Vancouver skews provincial affordability
Rapid home price increases in Vancouver significantly impacted housing
affordability in British Colombia in the second quarter. RBC's measures
for the province rose more than any other province, up 2.5 percentage
points for two-storey homes, 2.1 percentage points for bungalows, and
0.4 percentage points for condominiums.
Alberta: Market settling down with support from affordable conditions
Following the plunge in oil prices in the first quarter of 2015,
Alberta's housing market settled down in the second quarter. RBC's
measures for the province fell by 0.5 percentage points for two-storey
homes, 0.1 percentage points for bungalows, and inched higher by 0.2
percentage points for condominiums.
Saskatchewan: Signs of market recovery
Signs of recovery in the home resale market were apparent in the second
quarter, although resale activity remained far below levels in 2014.
RBC's measures increased by 0.8 percentage points for both bungalows
and two-storey homes, while the measure for condominiums decreased by
0.2 percentage points.
Manitoba: Affordability was a mixed bag
Owning a bungalow or condominium became less affordable in Q2, while
owning a two-story home became more affordable. RBC's measures rose
modestly for both bungalows and condominiums at 0.7 percentage points,
while the measure for two-storey homes fell by 0.5 percentage points.
Ontario: Affordability picture continues to be split
Owning a single-detached home at market prices in the province has
become less and less affordable, while owning a condominium appears to
be within reach. RBC's measures showed further deterioration for
bungalows (rising by 1.1 percentage points) and two-storey homes (up
0.7 percentage points), while condominiums remain fairly steady (down
only 0.1 percentage points).
Quebec: Improving affordability trends persist
Housing affordability continued to improve in Quebec in Q2. RBC's
affordability measures fell in all three categories for the third
consecutive quarter and by some of the largest margins across all the
provinces. Two-storey homes fell by 1.1 percentage points, bungalows
fell by 0.9 percentage points, and condominiums decreased by 0.5
The full RBC Housing Trends and Affordability report is available
online, as of 8:00 a.m. ET today, at rbc.com/economics/market.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192
Romina Mari, Communications, RBC Capital Markets, 416-974-3558