TORONTO, March 3, 2015 /CNW/ - Ontario's housing market bucked the
generally improving housing affordability trend across Canada in Q4
2014, according to the latest Housing Trends and Affordability Report issued today by RBC Economics.
"The contrast between Ontario's eroding affordability and developments
in the majority of other provinces highlights the fact that the ability
to become a home owner in key local markets - mainly Toronto - continue
to be pressured by intense competition between buyers," said Craig
Wright, senior vice-president and chief economist, RBC.
Despite declines in December and January, home resales stood at
moderately elevated level, from historical perspective, in the latter
months of 2014. This, coupled with a limited number of homes available
for sale, gave sellers more control over pricing, RBC says.
"While demand-supply conditions in Ontario loosened a bit in Q4, they
continue to support among the stronger rates of price increases across
Canada's provincial markets," said Wright.
The RBC housing affordability measures, which capture the province's
proportion of pre-tax household income needed to service the costs of
owning a home at market values, edged lower for all housing types in
the third quarter (a rise in the measure represents deterioration in
RBC's affordability measures for Ontario increased across categories in
the fourth quarter: 1.0 percentage points to 51.5 per cent for
two-storey homes, 0.6 percentage points to 45.3 per cent for bungalows,
and 0.2 percentage points to 29.2 per cent for condos.
Toronto homebuyers unfazed as affordability slips further
Toronto's housing market saw robust demand in the fourth quarter,
maintaining the sellers' advantage and supporting solid price
In spite of easing resales in the closing months of 2014, activity in
the area was historically brisk in the fourth quarter. RBC says demand
was likely even stronger than resale numbers suggested because of
limited new listings possibly restraining activity in the past year.
"Although Toronto's demand-supply conditions eased up in Q4, price
momentum remained solid, further contributing to a deterioration in
affordability and raising the homeownership bar even higher, especially
for single detached homes" added Wright.
RBC measures for Toronto climbed in all categories, extending
long-standing deteriorating trends in the area. RBC's measures rose by
1.8 percentage points to 65.6 per cent for two-storey homes, by 0.8
percentage points to 56.8 per cent for bungalows and by 0.3 percentage
points to 33.9 per cent for condominiums. Current affordability levels
appear stretched relative to historical norms for single family homes.
Deterioration in Ottawa's affordability likely temporary
Some earlier concerns that arose in Ottawa due to slowing resale
activity in late 2013 and early 2014 have eased recently thanks to a
rebound in resales during the second half of last year. RBC says
concerns do still persist, however. Since 2010, steady increases in the
number of homes available for sale brought a lot of supply to market
which reached historically high levels in 2014.
"Despite minor tightening in the last two quarters, demand-supply
conditions in the Ottawa area stand near their loosest state since
1998," said Wright. "This has had a clear restraining effect on prices,
particularly in the condo segment where there have been outright
Still, Q4 brought modest price increases to all housing categories,
contributing to slight deterioration in affordability. Given
challenging market conditions, however, further deterioration seems
unlikely in the near term, says RBC.
RBC's measures edged higher for all housing types, moving up 0.2
percentage points to 36.0 per cent for bungalows, 0.1 percentage points
to 37.7 per cent for two-storey homes and 0.1 percentage points to 24.1
per cent for condominiums.
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in Q4 of 2014 is as follows: Vancouver 82.4
(down 1.2 percentage points from Q3); Toronto 56.8 (up 0.8 percentage
points); Montreal 37.3 (unchanged); Ottawa 36.0 (up 0.2 percentage
points); Calgary 33.7 (down 0.6 percentage points); Edmonton 33.5 (up
0.1 percentage points).
The RBC Housing Affordability measure, which has been compiled since
1985, is based on the calculated 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: Small improvement in affordability conditions
Housing affordability slightly improved across all categories of homes
measured by RBC, primarily reflecting stronger household income arising
from brighter economic prospects in the province. During Q4, RBC's
measures eased between 0.1 and 0.7 percentage points.
Alberta: Housing remains relatively affordable despite buffeted economic
Housing affordability was mainly unchanged in Alberta during Q4,
continuing to be fairly attractive relative to other provinces and
compared to historical averages. RBC's measure for bungalows fell by
0.4 percentage points, and remained unchanged for both condos and
Saskatchewan: Price declines translate to improved affordability
Price declines in the province during the fourth quarter of 2014
contributed to the fifth consecutive quarter of affordability
improvements. RBC's measures fell by 0.6 percentage points for both
bungalows and two-storey homes. The measure for condos, however, rose
by 0.6 percentage points.
Manitoba: Affordability improves across the provincial housing market
It became more affordable to buy a home in Manitoba during the fourth
quarter of 2014 with RBC's measures falling across all housing
categories (between 0.1 and 0.4 percentage points over the third
Quebec: Broad-based improvements in affordability continue
Steady improvements in Quebec's housing affordability continued in the
fourth quarter of 2014 with RBC's measure declining across all
categories tracked. Measures fell by 0.6 percentage points for
two-storey homes and by 0.4 percentage points for both bungalows and
Atlantic Canada: Among the most affordable markets in Canada
The region's homebuyers continued to face some of the most affordable
conditions across the country in Q4 of 2014. RBC's affordability
measures fell for both the two-storey and bungalow segments, by 0.5 and
0.1 percentage points, respectively. The measure for the condo segment
edged higher by 0.1 percentage points.
The full RBC Housing Trends and Affordability report is available online as of 8 a.m. ET today.
For further information:
Robert Hogue, Senior Economist, RBC Economics, 416-974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416-842-5635