TORONTO, Feb. 25, 2014 /CNW/ - Quebec's housing affordability remained
largely unchanged in the fourth quarter of 2013, according to the
latest Housing Trends and Affordability Report issued today by RBC Economics.
RBC notes that homebuyers in the province continue to benefit from
relatively affordable conditions when comparing measures against their
long-run averages, suggesting that affordability considerations are
unlikely to be a significant impediment to the provinces' homebuyers at
"Quebec's housing market has been a little on the soft side lately, with
resales nearly 7.0 per cent below the 10-year average in the fourth
quarter, and down 3.6 per cent from the third quarter," said Craig
Wright, senior vice-president and chief economist, RBC. "This calm may
be a sign of erosion in homebuyer confidence following setbacks in the
provincial job market in early 2013. On a more positive note, we have
seen these setbacks reverse in more recent months which may point to
some degree of strengthening in the period ahead."
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 in Quebec, remained largely the same
across housing categories in the third quarter of 2013 (an increase in
the measure represents deterioration in affordability).
RBC notes that the only observable variation in affordability was for
the two-storey homes category, which deteriorated slightly - the
measure inched 0.2 percentage points higher to 43.6 per cent. The RBC
measures for bungalows and condominiums remained unchanged at 34.3 per
cent and 26.7 per cent, respectively.
Montreal-area housing affordability improves in the fourth quarter
The Montreal-area housing market rebound hit a snag in the fourth
quarter of 2013, and remains well short of reversing the slide that
took place in 2012 and early 2013. Resales fell by 8.1 per cent between
the third and fourth quarters, sinking 24 per cent below the fourth
quarter 10-year average.
During 2013, the increased number of condos for sale contributed to
modest price declines, though demand and supply conditions in the area
remain balanced overall.
"Affordability, or any lack thereof, does not appear to be a significant
obstacle to prospective homebuyers in Montreal, despite that fact that
owning a two-storey home at current market prices is somewhat of a
stretch for households in the area," said Wright.
Montreal affordability levels largely improved in the fourth quarter.
RBC's measures eased by 0.4 percentage points to 50.8 per cent for
two-storey homes and by 0.2 percentage points to 30.6 per cent for
condominium apartments. The measure for bungalows was unchanged at 38.8
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in the fourth quarter of 2013 is as follows:
Vancouver 81.6 (down 2.3 percentage points from the previous quarter);
Toronto 55.6 (up 0.1 percentage points); Montreal 38.8 (unchanged);
Ottawa 36.7 (down 0.4 percentage points); Calgary 33.8 (down 0.2
percentage points); Edmonton 33.3 (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:
Alberta's homes become even more affordable
Owning a home at market value in Alberta became slightly more affordable
for most housing categories in the final quarter of 2013 and continued
to compare favourably against historical and national averages. RBC's
measures fell by 0.5 percentage points for two-storey homes and by 0.2
percentage points for bungalows. The measure for condominiums edged
higher by 0.1 percentage points.
Saskatchewan's affordability trends sideways
Housing affordability in the province continued to play a predominantly
neutral role in home-buying decisions with levels standing close to
historical norms. RBC's affordability measures declined 1.1 percentage
points for two-storey homes and 0.2 percentage points for bungalows.
The measure for condominiums was up by 0.4 percentage points.
Manitoba's surge in listings lends a hand to affordability
A surge in newly listed homes for sale weakened demand-supply conditions
in Manitoba during the second half of 2013, which ultimately helped to
improve affordability with RBC measures for two-storey homes and
bungalows slipping by 1.1 percentage points and 0.6 percentage points,
respectively. The measure for condominiums rose by 0.8 percentage
Ontario's affordability picture remains largely unchanged
RBC's affordability measures for Ontario eased by 0.1 percentage points
for both bungalows and two-storey homes and stayed flat for
condominiums in the fourth quarter of 2013. Owning a single-detached
home at market value in the province continues to take a larger share
of household income compared to the historical average despite marginal
improvements for the first time in a year.
Atlantic Canada retains decent affordability conditions
Housing affordability in the region remained at generally neutral levels
in the fourth quarter, and still compared favourably against the
majority of markets across Canada. RBC's measures fell by 0.6
percentage points for two-storey homes and by 0.1 percentage points for
bungalows. The measure for condominiums rose by 0.2 percentage points.
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at rbc.com/economics/economic-reports/canadian-housing-forecast.html.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416-842-5635