Home sales rebound as prices rise in more upbeat market
TORONTO, Sept. 9 /CNW/ - Home affordability in Quebec continued to
improve in the second quarter, helping the housing market get back on track in
the province, according to the latest housing report released today by RBC
"Greater affordability has opened the door more fully to buyers, who have
sprung into action," noted Robert Hogue, senior economist at RBC. "Sales of
existing homes in Quebec have rebounded strongly, rising by more than 40 per
cent from the cyclical low reached mid-winter, with improved market sentiment
helping prices rise."
The RBC Affordability measure for Quebec, which captures the proportion
of pre-tax household income needed to service the costs of owning a home,
improved across all four housing classes once more in the second quarter of
2009. Affordability of the benchmark detached bungalow moved down to 32.4 per
cent, the standard townhouse down to 27.7 per cent, the standard condo down to
27.2 per cent and the standard two-storey home down to 38.7 per cent.
In the Montreal area, housing market activity appears to be in top gear
again, with a resurgence in resales since the spring. RBC's Affordability
measures decreased by 3.3 to 5.1 percentage points year-over-year in the
second quarter, depending on the housing type. However, the levels of these
measures still stood above long-term averages.
"Montreal's year-long improvement in affordability has been more muted in
comparison to most other areas," explained Hogue. "With tighter market
conditions firming prices again and hefty declines in mortgage rates a thing
of the past, affordability is unlikely to be restored that much more."
RBC's Affordability measure for a detached bungalow for Canada's largest
cities is as follows: Vancouver 63.4 per cent, Toronto 46.5 per cent, Ottawa
38.6 per cent, Montreal 37.3 per cent and Calgary 35.7 per cent.
The report also looked at mortgage carrying costs relative to incomes for
a broader sampling of cities across the country, including Montreal and Quebec
City. For these cities, RBC has used a narrower measure of housing
affordability that only takes mortgage payments relative to income into
The Housing Affordability measure, which RBC has compiled since 1985, is
based on the costs of owning a detached bungalow. Alternative housing types
are also presented including a standard two-storey home, a standard townhouse
and a standard condo. 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: In the second quarter, housing affordability in
B.C. eased once again, further extending the downward trend since the
start of 2008, although homeownership costs are still significantly
above long-term levels. Sales of existing homes surged by more than
125 per cent from their cyclical trough early this year. Market
conditions have tightened and there has been some firming of prices.
- Alberta: The biggest cumulative drop in the history of RBC
Affordability measures in Alberta deepened further in the second
quarter, falling to levels not seen since before the housing boom.
Existing home sales soared by more than 60 per cent between April and
July, fully reversing last year's slide. Tightening market conditions
should set the stage for some property value appreciation in the near
- Saskatchewan: Affordability has improved considerably in Saskatchewan
since early last year, but homeownership costs remain above long-term
averages. Regardless, sales of existing homes rebounded smartly,
rising by more than 50 per cent since their lows in March. If this
trend is sustained, property prices can be expected to eventually
heat up as well.
- Manitoba: The notable easing of homeownership costs in the past year
has fully repaired affordability in Manitoba, compared to historical
averages. Resale activity ramped up during spring and summer and
property prices generally maintained their steady upward trend,
supported by relatively tight market conditions.
- Ontario: Solid improvements in affordability in Ontario have
supported a strong upturn in the market in recent months. All
Affordability measures are now below historic averages, indicating
that homeownership costs are at attractive levels in the province.
The general tone of the market is generally positive, but local
demand continues to be held back by the tough economic prospects many
communities in Ontario continue to face.
- Atlantic Canada: Rebounding from a relatively restrained downturn,
housing affordability in Atlantic Canada continues to improve, albeit
at a more moderate pace than elsewhere in the country. Affordability
measures have declined noticeably since early last year and now stand
below long-term averages. Sales of existing homes climbed by more
than 18 per cent since January and property values increased
modestly. Overall, Atlantic Canada is enjoying relatively attractive
affordability levels, which should support housing activity in the
The full RBC Housing Affordability report is available online, as of 8
a.m. EDT today at www.rbc.com/economics/market/pdf/house.pdf
For further information:
For further information: Robert Hogue, RBC Economics, (416) 974-6192;
Matthew Gierasimczuk, RBC Media Relations, (416) 974-2124