Strong provincial economy drives provincial housing market
Calgary ranks among Canada's most affordable major cities
TORONTO, Nov. 25, 2011 /CNW/ - Alberta's housing market is showing
increasing signs of strength, owing to impressive employment gains and
a strong provincial economy so far this year, according to the latest Housing Trends and Affordability Report released today by RBC Economics.
"In the third quarter, provincial home resales and housing starts picked
up some steam, reaching their highest levels in more than a year," said
Robert Hogue, a senior economist with RBC. "This renewed demand for
Alberta's housing was partly a result of being an easily affordable
market - in fact, the most affordable in Canada."
RBC's housing affordability measures for Alberta - which capture the
province's proportion of pre-tax household income needed to service the
costs of owning a home at market values - have remained the lowest
among the provinces. Most measures were unchanged in the third quarter
(a decline represents increased affordability).The two-storey home
category was the only measure that moved, showing a decrease of 0.4
percentage points to 36.0 per cent.
"Going forward, we expect that positive underlying fundamentals will
continue to underpin home resale activity in the province," said Hogue.
The RBC report indicates that Calgary's market is seeing some renewed
momentum in the latest quarter - home resales and prices picked up
again for most housing categories in the area. Strong market momentum
translated into a slight deterioration in affordability, however. RBC
measures for Calgary increased for most housing types in the third
quarter - detached bungalows by 0.5 percentage points, and condominiums
by 0.2 percentage points. Two-storey homes were the exception, posting
a decrease of 0.3 percentage points to 38.2 percent.
"Despite some slight deterioration in affordability, Calgary continues
to be one of the most affordable major cities in the country," added
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities is as follows: Vancouver 90.6 per cent (down
1.5 percentage points from the previous quarter), Toronto 52.1 per cent
(up 0.1 percentage points), Montreal 40.9 per cent (down 1.3 percentage
points), Ottawa 40.8 per cent (down 0.6 percentage points), Calgary
37.6 per cent (up 0.5 percentage points) and Edmonton 33.2 per cent
(down 0.6 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. Alternative
housing types are also presented, including a standard two-storey home
and a standard condominium. The higher the reading, the more costly it
is to afford a home based on going market values. 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: The combination of moderate declines in mortgage rates and softer prices
for some housing types made it slightly more affordable to own a home
in British Columbia in the third quarter. The RBC Affordability
measures for British Columbia decreased between 0.3 and 1.2 percentage
points in the quarter, but remain well above historical norms. The poor
affordability picture in British Columbia will continue to weigh on
local housing demand.
Vancouver continues to experience sky-high home prices, even though the
RBC affordability measures fell between 1.5 percentage points and 0.8
percentage points. Current market prices continue to weigh on local
homebuyers, as home ownership costs remain well above historical norms.
Saskatchewan: In the third quarter, there was widespread improvement in housing
affordability in Saskatchewan. RBC measures fell for all housing types
between 0.8 and 0.9 percentage points, reversing part of the increases
from the previous quarter. Home resales picked up significantly in the
province, with strong gains registered in Saskatoon and Regina. The
Saskatchewan housing market will continue to be well-supported by
strong economic growth in the coming year.
Manitoba: Housing affordability continues to be attractive in Manitoba, showing
some of the most significant improvements in the country in the third
quarter. The RBC measures for two-storey homes fell 1.5 percentage
points, while the measures for detached bungalows declined by 1.2 per
cent and for condominium apartments by 0.8 percentage points.
Homebuyers took advantage of the greater affordability in the third
quarter and boosted home resales by 5.3 per cent.
Ontario: Ontario's housing affordability experienced very little change in the
third quarter of 2011. Condominium apartments were the only housing
type to see any movement, with the RBC measure decreasing by a mere 0.1
percentage point. Affordability in Ontario stands just slightly worse
than the historical average in the province. Home resales in Ontario
increased at a robust 3.8 per cent rate. Market activity in Ontario is
balanced at the moment, and home prices are increasing at a steady yet
moderate pace. The number of homes for sale in Ontario is on the rise,
which will likely slow the pace of property appreciation in the period
The Toronto area remains a sellers market even as RBC measures clearly
stand above long-term averages for the area. In the third quarter,
measures for Toronto were little changed, increasing by a mere 0.1
percentage point for detached bungalows, declining by 0.3 percentage
points for two-storey homes and staying flat for condominiums.
Ottawa measures decreased over all housing types in the third quarter
from 0.2 to 0.6 percentage points. The earlier cooling in market
activity in the area has almost entirely reversed in the latest period,
as home resales rebounded by eight per cent.
Quebec: RBC measures for Quebec declined between 0.1 and 1.4 percentage points,
reversing some of the back-to-back deteriorations in affordability seen
in the first and second quarters. All measures in Quebec stand slightly
above their long-term averages, and more so in the case of standard
two-storey homes, corresponding to a moderate strain in affordability
in the province.
Montreal's affordability measure for standard two-storey homes fell the
most among Canada's largest cities in the third quarter, dropping by
2.3 percentage points. The measure for detached bungalows also fell
substantially (by 1.3 percentage points), while condominium
affordability was largely unchanged (a marginal increase of 0.1
percentage points). Despite the improvement in the latest period, the
Montreal-area market still faces some stress, as affordability levels
continue to be somewhat worse than they have historically been, on
Atlantic Canada: Atlantic Canada's housing market continues to be among the most
affordable in Canada, with further modest improvements in the third
quarter: the RBC measures eased between 0.4 and 0.6 percentage points.
Although many markets in New Brunswick have displayed signs of cooling
in the last two quarters amid deterioration in the province's labour
market, overall, home resales increased marginally in the region. With
slow economic growth projected in Atlantic Canada next year, housing
trends are likely to remain largely stable in the region.
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at www.rbc.com/economics/market/.
For further information:
Robert Hogue, RBC Economics Research, 416-974-6192
Elyse Lalonde, Media Relations, RBC, 416-974-8810