LÉVIS, QC, Oct. 29, 2013 /CNW Telbec/ - According to Desjardins Group Economic Studies, the Canadian housing market is now less affordable than it has been on
average for the last 25 years. This decline stems from average home
prices outpacing household income in the third quarter as well as a
small hike in mortgage rates.
Despite affordability declining in the third quarter, it is only
slightly below the average for the last 25 years. "A much steeper drop
would be needed to rein in the Canadian housing market," according to
Desjardins economists. Home sales, which plummeted after the new
federal government rules came into effect in summer 2012, have started
to trend upward in the last few months. Rising mortgage rates during
the summer hurried buyers; many took action out of fear that mortgage
rates would climb even higher. Even if the coming months bring more
increases; they won't be enough to trigger a significant dip in
affordability. However, housing market activity in Canada should
stabilize soon. Rising prices, which are at historic highs in the
country's main agglomerations, should eventually start cooling buyer
Most markets are still affordable in Ontario, none in Québec
Despite a decline in nearly all Ontario CMAs, most markets are still
affordable. Toronto is an exception, where the average home price is
$527,821, well above that observed in other agglomerations in the
province. The Desjardins Affordability Index is only slightly under
the historical average in Calgary, despite relatively high home prices
($438,793 in the third quarter). The sharp rise in average household
income, which now surpasses $110,000, makes home purchases easier.
"No markets in Quebec are considered historically affordable," according
to Desjardins economists. Sherbrooke and Quebec City rank alongside
Vancouver as some of the least affordable agglomerations in the
country. Even though housing prices are much lower than on the west
coast, incomes in these two CMAs are considerably lower, making home
purchases more difficult.
The financial capacity to buy a property in Quebec was fairly stable in
the third quarter of 2013, at slightly below the average level that has
been prevailing since the end of the 1980s. "While housing prices
continue their ascent in Canada, they seem to be stabilizing in
Quebec," says Hélène Bégin, Desjardins Group Senior Economist. Home
price increases paused in Montreal and Quebec City due to a surplus in
condos. Rising prices are losing steam in the Quebec City market while
prices in Montreal are starting to edge down. Prices continue to rise,
however, for single-family homes, whose market is balanced, overall.
Housing prices continued to climb in Gatineau, Sherbrooke, Saguenay and
Trois-Rivières, affordability thus deteriorated in the third quarter.
For more information, consult the most recent study.
About Desjardins Group
Desjardins Group is the fifth largest cooperative financial group in the world with
assets close to $205 billion. To meet the diverse needs of its members
and clients, Desjardins offers a full range of products and services
through its extensive distribution network, online platforms and
subsidiaries across Canada. The group has one of the highest capital
ratios and credit ratings in the industry, and outranks all American banks as the fourth safest
and strongest bank in North America according to Global Finance magazine and Bloomberg News respectively. In keeping with their cooperative nature, Desjardins Caisses' surplus
earnings are reinvested into the communities they serve.
SOURCE: Desjardins Group
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