TORONTO, Feb. 25, 2014 /CNW/ - British Columbia saw improved
affordability levels across all three housing categories in the fourth
quarter of 2013, following deterioration in the two previous quarters,
according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
The RBC report notes that home resales in the province settled around
their 10-year average in the final quarter of 2013. Homebuyer demand
has been on an upswing in British Columbia since spring of 2013,
following a two-year slide from 2011 through to 2012.
"The sentiment among British Columbia's homebuyers is decidedly more
upbeat now compared to a year ago when there were concerns that a
damaging correction was underway in Vancouver," said Craig Wright,
senior vice-president and chief economist, RBC. "That said - and while
there was a notable improvement in the fourth quarter -affordability
conditions remain poor, particularly in the Vancouver area, when
compared to the rest of Canada."
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, decreased across all categories in the fourth quarter
of 2013 (a decline in the measure represents improvement in
RBC's affordability measures for British Columbia fell 1.4 percentage
points to 67.7 per cent for bungalows, 1.0 percentage points to 73.2
per cent for two-story homes and 1.1 percentage points to 33.7 per cent
Affordability in Vancouver still poor despite improvement
The Vancouver-area market turned itself around by fall of last year,
recovering from the slump in 2012 and the early part of 2013. Since
then, resale activity stabilized near the 10-year average and balance
between demand and supply has been re-established. To date, the pace of
home price increases has been fairly subdued and somewhat volatile.
"If it is possible to take some comfort from the earlier housing market
slump, it would be in noting that it contributed to some improvement in
Vancouver's very poor affordability levels," said Wright. "Still,
housing affordability remains uncomfortably stretched and this is
likely perpetuating market stress in the area."
RBC's measures for Vancouver decreased the most among all major markets
in Canada, down 2.3 percentage points to 81.6 per cent for bungalows,
1.6 percentage points to 86.0 per cent for two-storey homes and 1.0
percentage points to 41.0 per cent for condominiums.
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:
Alberta's homes become even more affordable
Owning a home at market value in Alberta became slightly more affordable
for most housing categories in the final quarter of 2013 and continued
to compare favourably against historical and national averages. RBC's
measures fell by 0.5 percentage points for two-storey homes and by 0.2
percentage points for bungalows. The measure for condominiums edged
higher by 0.1 percentage points.
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