TORONTO, Aug. 28, 2014 /CNW/ - Housing affordability in Atlantic Canada
improved quite noticeably in Q2 2014, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
"Atlantic Canada's homebuyers stood to benefit from a noticeable
improvement in affordability levels in the second quarter thanks to a
combination of lower mortgage rates and muted price pressures," said
Craig Wright, senior vice-president and chief economist, RBC. "Still,
housing markets in the region face some headwinds - demand is generally
weak due to sluggish provincial economies, slumping job markets and
unfavourable demographic trends."
RBC says that while home resales rose slightly in the second quarter
from their first quarter levels (on a seasonally-adjusted basis) in the
region, they remained close to their 10-year lows.
"During the first half of 2014, housing activity was especially
depressed in Halifax and Fredericton, and to a lesser extent, Moncton.
Buyers are in the driver's seat in these markets," added Wright.
The RBC housing affordability measures, which capture the region's
proportion of pre-tax household income needed to service the costs of
owning a home at market values, decreased for all three categories in
the second quarter of 2014 (a decline in the measure represents
improvement in affordability).
RBC's affordability measures eased by 1.5 percentage points to 29.7 per
cent for detached bungalows, by 1.4 percentage points to 24.5 for
condos and by 1.6 percentage points to 34.5 for two-storey homes.
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in the second quarter of 2014 is as follows:
Vancouver 81.8 (down 0.3 percentage points from the previous quarter);
Toronto 55.9 (down 0.2 percentage points); Montreal 37.3 (down 1.6
percentage points); Ottawa 36.0 (down 0.4 percentage points); Calgary
33.6 (down 0.8 percentage points); Edmonton 31.7 (down 1.1 percentage
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: affordability broadly improves
Housing affordability in the province improved across the board in the
second quarter, with two-storey homes and condos reaching their most
attractive levels since late 2009. RBC's affordability measures for
B.C. fell between 0.9 and 2.0 percentage points. Still, owning a home
at market price in an area such as Vancouver continued to be very
difficult for an average household to afford.
Alberta: housing affordability remains attractive
Escalating prices in the province were largely taken in stride by
Alberta homebuyers in Q2 as lower mortgage rates and solid growth in
household incomes provided offset. Affordability in the province
improved modestly with RBC measures easing between 0.2 and 0.9
Saskatchewan: homebuyers face little undue affordability pressure
The provincial housing market rebounded strongly in the second quarter
with home resales jumping to a new record-high. At the same time, RBC's
affordability measures for Saskatchewan fell between 1.3 and 0.8
percentage points, and stood close to their historical averages.
Manitoba: new home listings surge; affordability plays largely neutral
The big housing market story in Manitoba was a surge of homes being
offered for sale with new listings growing to levels almost 14 per cent
above where they were a year ago. RBC's affordability measures fell
between 0.5 and 1.5 percentage points but remained close to long-run
averages, suggesting that affordability likely plays a neutral role in
home buying decisions in the province.
Ontario: homebuyers undisturbed by affordability strains
Housing affordability changed very little in Ontario in the second
quarter and homebuyers did not appear to be overly concerned by the
fact that affordability remained somewhat stretched for single-family
homes. Lower rates were the main factor contributing to marginal
declines in RBC's measures for Ontario, which edged lower between 0.1
and 0.2 percentage points.
Quebec: improved affordability helps halt housing market slide
Quebec's housing market activity, which had been falling since early
2012, stabilized in Q2. Home resales rose modestly and the supply of
homes for sale grew. Second quarter affordability measures for the
province eased for all housing types - between 0.9 and 1.8 percentage
points. This improvement in affordability likely helped stabilize the
market at the margin in the latest quarter.
The full RBC Housing Trends and Affordability report is available online as of 8 a.m. ET today.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416-842-5635