Toronto remains a sellers market; housing affordability slightly
Price increases slow in Ottawa market; housing affordability improving
TORONTO, Nov. 25, 2011 /CNW/ - The cost of owning a home in Ontario
stabilized in the third quarter of 2011, according to the latest Housing Trends and Affordability Report issued today by RBC Economics.
"Ontario's housing market is fairly balanced overall and affordability
remains neutral in the province. With little to hinder market activity,
resales advanced by 3.8 per cent," said Robert Hogue, senior economist,
RBC. "Looking ahead, the province will likely continue to experience
modest price increases. As the number of homes for sale continues to
rise, the pace of property appreciation will slow in the period ahead."
RBC's housing affordability measures for Ontario, which capture the
province's proportion of pre-tax household income needed to service the
costs of owning a home based on the going market value, held steady in
the third quarter across most housing types (an increase represents a
deterioration in affordability). The RBC measures for the benchmark
detached bungalow and the standard two-storey home remained unchanged
(at 42.6 per cent and 48.8 per cent respectively). A marginal
improvement was recorded for condominium apartments ��� the measure
edged lower by 0.1 percentage points to 29.8 per cent.
The RBC report notes that the Toronto-area housing market continued its
march forward, as motivated homebuyers drove the sales of existing
"Toronto remains a sellers' market. Conditions remained tight in the
third quarter, even as the number of units for sale rose," added Hogue.
RBC measures for Toronto-area homes increased by 0.1 percentage points
to 52.1 per cent for detached bungalows and decreased by 0.3 per cent
to 61.3 per cent for standard two-storey homes. The measure for
standard condominiums was unchanged at 34.3 per cent.
"With affordability levels clearly standing above long-term averages,
the local market continues to push the envelope on the affordability
front," Hogue commented. "Housing demand is bound to face some
affordability headwinds going forward."
There was a strong rebound in home resales in Ottawa in the third
quarter - increasing by 8.0 per cent, after falling by 4.5 and 4.1 per
cent in the previous two quarters. This was accompanied by an even
stronger increase in the number of homes for sale (9.5 per cent), which
led to a modest easing of market conditions.
"Since the fall of 2010, we have seen a rapid rise in home prices in the
Ottawa area," added Hogue. "In the third quarter, however, Ottawa
experienced a substantial slowing in the pace of home price increases
across all housing categories. For detached bungalows, prices actually
remained flat. This weaker rate of property appreciation contributed to
improvements in housing affordability."
RBC measures for the Ottawa area decreased in the second quarter by 0.2
percentage points to 28.2 per cent for standard condominiums, by 0.6
percentage points to 40.8 per cent for detached bungalows and by 0.4
percentage points to 42.9 per cent for standard two-storey homes.
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities is as follows: Vancouver 90.6 per cent (down
1.5 percentage points from the previous quarter), Toronto 52.1 per cent
(up 0.1 percentage points), Montreal 40.9 per cent (down 1.3 percentage
points), Ottawa 40.8 per cent (down 0.6 percentage points), Calgary
37.6 per cent (up 0.5 percentage points) and Edmonton 33.2 per cent
(down 0.6 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. Alternative
housing types are also presented, including a standard two-storey home
and a standard condominium. The higher the reading, the more costly it
is to afford a home based on going market values. 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: The combination of moderate declines in mortgage rates and softer prices
for some housing types made it slightly more affordable to own a home
in British Columbia in the third quarter. The RBC Affordability
measures for British Columbia decreased between 0.3 and 1.2 percentage
points in the quarter, but remain well above historical norms. The poor
affordability picture in British Columbia will continue to weigh on
local housing demand.
Vancouver continues to experience sky-high home prices, even though the
RBC affordability measures fell between 1.5 percentage points and 0.8
percentage points. Current market prices continue to weigh on local
homebuyers, as home ownership costs remain well above historical norms.
Alberta: Impressive gains in Alberta's economy contributed to a stronger
provincial housing market in the third quarter of this year. Home
resales and housing starts reached their highest levels in over a year,
thanks to renewed demand for housing in the province. RBC affordability
measures for Alberta remained mostly unchanged and the lowest among the
provinces in the third quarter.
Affordability measures in Calgary deteriorated slightly for most housing
types in the third quarter, rising between 0.2 and 0.5 percentage
points. Nonetheless, Calgary-area homebuyers continue to benefit from
attractive affordability, which remained the best among Canada's major
Saskatchewan: In the third quarter, there was widespread improvement in housing
affordability in Saskatchewan. RBC measures fell for all housing types
between 0.8 and 0.9 percentage points, reversing part of the increases
from the previous quarter. Home resales picked up significantly in the
province, with strong gains registered in Saskatoon and Regina. The
Saskatchewan housing market will continue to be well-supported by
strong economic growth in the coming year.
Manitoba: Housing affordability continues to be attractive in Manitoba, showing
some of the most significant improvements in the country in the third
quarter. The RBC measures for two-storey homes fell 1.5 percentage
points, while the measures for detached bungalows declined by 1.2 per
cent and for condominium apartments by 0.8 percentage points.
Homebuyers took advantage of the greater affordability in the third
quarter and boosted home resales by 5.3 per cent.
Quebec: RBC measures for Quebec declined between 0.1 and 1.4 percentage points,
reversing some of the back-to-back deteriorations in affordability seen
in the first and second quarters. All measures in Quebec stand slightly
above their long-term averages, and more so in the case of standard
two-storey homes, corresponding to a moderate strain in affordability
in the province.
Montreal's affordability measure for standard two-storey homes fell the
most among Canada's largest cities in the third quarter, dropping by
2.3 percentage points. The measure for detached bungalows also fell
substantially (by 1.3 percentage points), while condominium
affordability was largely unchanged (a marginal increase of 0.1
percentage points). Despite the improvement in the latest period, the
Montreal-area market still faces some stress, as affordability levels
continue to be somewhat worse than they have historically been, on
Atlantic Canada: Atlantic Canada's housing market continues to be among the most
affordable in Canada, with further modest improvements in the third
quarter: the RBC measures eased between 0.4 and 0.6 percentage points.
Although many markets in New Brunswick have displayed signs of cooling
in the last two quarters amid deterioration in the province's labour
market, overall, home resales increased marginally in the region. With
slow economic growth projected in Atlantic Canada next year, housing
trends are likely to remain largely stable in the region.
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at www.rbc.com/economics/market/.
For further information:
Robert Hogue, RBC Economics Research, 416-974-6192
Elyse Lalonde, Media Relations, RBC, 416-974-8810