TORONTO, Aug. 31, 2015 /CNW/ - Quebec's housing affordability levels
continued to improve in the second quarter of 2015, according to the
latest Housing Trends and Affordability Report issued today by RBC Economics Research.
RBC reports that, despite signs of renewed vigour in Quebec's resale
market, home prices changed little in the second quarter, which
contributed to improved housing affordability across the board for the
third consecutive quarter. Following back-to-back quarters of declines,
home resales rose by a solid 5.5 per cent to a level that matched their
10-year average for the first time in three years.
"Quebec homebuyers are currently enjoying the most affordable conditions
in some time across the province," said Craig Wright, senior
vice-president and chief economist, RBC. "A recent string of
improvements in housing affordability levels - along with the recent
encouraging employment gains - no doubt contributed to pull the
provincial market out of its slump."
The RBC Housing Affordability measures, which capture the province's
proportion of pre-tax household income that would be needed to service
the costs of owning a home at current market values in Quebec, improved
for all housing types in the second quarter of 2015.
RBC's measures for Quebec fell in all three categories, and did so by
some of the largest margins across the provinces. Two-storey homes fell
by 1.1 percentage points to 40.0 per cent, bungalows eased by 0.9
percentage to 32.0 per cent, and condominium apartments dipped by 0.5
percentage points to 25.0 per cent. Each measure fell to, or close to,
10-year lows in the province. A decrease in the measure represents an
improvement in affordability.
"While slowing population growth, lacklustre economic performance and
high inventory of unabsorbed new condo units in Montreal will continue
to pose a challenge for Quebec's market in the near term, housing
affordability considerations are unlikely to be an obstacle for
potential homebuyers in the province," added Wright.
Owning a home in the Montreal area becomes more affordable
Montreal's affordability levels continued to steadily improve in the
second quarter, following a string of sizeable dips in affordability
measures earlier this year and in 2014. RBC reports that, among
Canada's top urban cities, Montreal enjoyed the greatest easing in the
overall burden of owning a home in the past year.
"While Montreal's pricing environment remained soft in the second
quarter due to fairly loose supply-demand conditions in some market
segments, material improvement in affordability in the past year helped
re-energize resale activity in the area," said Wright. "A high
inventory of recently-built, but still-unoccupied, condos continues to
be a considerable issue for the market; however, we saw a small decline
in that inventory in Q2, which suggests that things are moving in the
right direction on this front."
RBC's measures for Montreal eased by 1.5 percentage points to 46.3 per
cent for two-storey homes, by 1.2 percentage points to 36.0 per cent
for bungalows, and by 0.7 percentage points to 28.5 per cent for
During Q2 2015, national affordability measures rose by 0.7 percentage
points to 43.3 per cent for bungalows and by 0.4 percentage points to
48.3 per cent for two-storey homes. The measure for condominiums
remained unchanged at 27.1 per cent.
RBC's Housing Affordability measure for the benchmark detached bungalow
in Canada's largest cities in Q2 2015 is as follows: Vancouver 88.6 (up
3.0 percentage points from Q1 2015); Toronto 59.4 (up 2.1 percentage
points); Montreal 36.0 (down 1.2 percentage points); Ottawa 35.4
(unchanged); Calgary 32.4 (down 0.4 percentage points); Edmonton 32.5
(down 0.4 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:
British Columbia: Vancouver skews provincial affordability
Rapid home price increases in Vancouver significantly impacted housing
affordability in British Colombia in the second quarter. RBC's measures
for the province rose more than any other province, up 2.5 percentage
points for two-storey homes, 2.1 percentage points for bungalows, and
0.4 percentage points for condominiums.
Alberta: Market settling down with support from affordable conditions
Following the plunge in oil prices in the first quarter of 2015,
Alberta's housing market settled down in the second quarter. RBC's
measures for the province fell by 0.5 percentage points for two-storey
homes, 0.1 percentage points for bungalows, and inched higher by 0.2
percentage points for condominiums.
Saskatchewan: Signs of market recovery
Signs of recovery in the home resale market were apparent in the second
quarter, although resale activity remained far below levels in 2014.
RBC's measures increased by 0.8 percentage points for both bungalows
and two-storey homes, while the measure for condominiums decreased by
0.2 percentage points.
Manitoba: Affordability was a mixed bag
Owning a bungalow or condominium became less affordable in Q2, while
owning a two-story home became more affordable. RBC's measures rose
modestly for both bungalows and condominiums at 0.7 percentage points,
while the measure for two-storey homes fell by 0.5 percentage points.
Ontario: Affordability picture continues to be split
Owning a single-detached home at market prices in the province has
become less and less affordable, while owning a condominium appears to
be within reach. RBC's measures showed further deterioration for
bungalows (rising by 1.1 percentage points) and two-storey homes (up
0.7 percentage points), while condominiums remain fairly steady (down
only 0.1 percentage points).
Atlantic Canada: Soft demand-supply conditions despite favourable affordability
Softness in the housing market drove homeownership costs down in Q2.
RBC's affordability measures fell across all categories (between 0.3
and 0.7 percentage points), adding to the continuous decline registered
since late 2013.
The full RBC Housing Trends and Affordability report is available
online, as of 8:00 a.m. ET today, at rbc.com/economics/market.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192
Romina Mari, Communications, RBC Capital Markets, 416-974-3558