TORONTO, April 16 /CNW/ - While Manitoba's housing markets have not been
immune to the general downturn, they have fared much better than the majority
in Canada and improving affordability conditions, since the latter part of
2008, will limit the downside risks ahead, according to the latest housing
report released today by RBC Economics.
"In contrast to other parts of the country, Manitoba's housing market
conditions have eroded modestly during the past few months thanks in part to
the province's decent economic performance," said Robert Hogue, senior
economist, RBC. "The absence of past excesses and affordability levels staying
out of the danger zone during the earlier housing boom have also contributed
to the province's relatively good standing."
RBC's Housing Affordability measure for Manitoba, which captures the
proportion of pre-tax household income needed to service the costs of owning a
home, improved modestly across all four classes last quarter as the benchmark
detached bungalow moved to 38.4 per cent, the standard townhouse to 24.8 per
cent, the standard condo to 22.6 per cent and the standard two-storey home to
41.7 per cent respectively.
The report noted that RBC's affordability measures for the fourth quarter
of 2008 were just barely off long-term averages and that resale activity in
Manitoba has slowed moderately in recent months. Housing prices have either
held their own or edged down just slightly.
RBC's Affordability measure for a detached bungalow for Canada's largest
cities is as follows: Vancouver 70.3 per cent, Toronto 51.3 per cent, Calgary
42.7 per cent, Ottawa 42.7 per cent and Montreal 39.4 per cent.
The report also looked at mortgage carrying costs relative to incomes for
a broader sampling of cities across the country, including Winnipeg. For these
cities, RBC has used a narrower measure of housing affordability that only
takes mortgage payments relative to income into account.
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
condominium. 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 markets remain under heavy downward
pressure, and prices and sales continue to slide. In the past year,
there has been a notable improvement in affordability, though the
recovery process has far to go.
- Alberta: Since last fall, the declining Alberta economy has
intensified the downdraft on the province's housing markets, causing
home resales to drop to a 12-year low at the end of 2008 and rebound
only modestly since. Affordability has been on an improving track
since about the middle of 2007.
- Saskatchewan: Market activity has cooled considerably from the
frenzied pace from 2006 to early 2008 and prices have begun to
decline. Nonetheless, economic and demographic fundamentals are still
largely supportive of the housing market and overshadow extremely
poor affordability levels.
- Ontario: With the recession pounding many communities, housing market
conditions have deteriorated considerably. However, the impact is
unlikely to develop into an all-out rout similar to that of the early
1990s. Affordability, while still causing some stress, is quickly
being restored to levels closer to long-term averages.
- Quebec: The province's housing markets have been among the last in
Canada to yield to the weakening trend. The main sign of cooling thus
far has been a drop in resale activity, as prices have held up
reasonably well. Some of the persisting market strength can be
ascribed to sensible affordability levels, which had eroded only
modestly in recent years.
- Atlantic region: Markets have largely remained stable against the
general housing downturn, with St. John's becoming the housing hot
spot in Canada and Halifax and Saint John maintaining steady upward
price momentum. The region is benefiting from improving affordability
following two years of deterioration.
The full RBC Housing Affordability report is available online, as of 8
a.m. E.D.T. today at www.rbc.com/economics/market/pdf/house.pdf.
For further information:
For further information: Robert Hogue, RBC Economics Research, (416)
974-6192; Jackie Braden, Media Relations, RBC, (416) 974-2124