TORONTO, March 3, 2015 /CNW/ - British Columbia's housing affordability
slightly improved across all categories tracked in the fourth quarter,
according to the latest Housing Trends and Affordability Report issued today by RBC Economics.
"British Columbia's homebuyers experienced some improvement in
affordability during Q4 - a reflection of stronger household incomes
related to brighter economic prospects and contained price increases
for the most part," said Craig Wright, senior vice-president and chief
economist, RBC. "Still, affordability in the province remains the
poorest in the country because of the persistence of extremely
unaffordable conditions in segments of the Vancouver market."
B.C.'s home resale activity drove forward in the fourth quarter, though
results were uneven across local markets, with gains in areas such as
Vancouver, Fraser Valley and Kamloops on the one hand, and declines in
Victoria, Kootenay and Okanagan on the other.
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, edged lower for all housing types in
the fourth quarter (a decrease in the measure represents an improvement
RBC's affordability measures slightly improved across all levels in the
fourth quarter of 2014. The measure for bungalows decreased by 0.7
percentage points to 68 per cent; the measure for standard two-storeys
decreased by 0.3 percentage points to 72.5 per cent; and, the measure
for condominiums eased by 0.1 percentage points to 33.1 per cent.
Vancouver remains Canada's least affordable market
RBC says that the housing market in Vancouver was unfazed by the fact
that affordability levels in the Vancouver area remained unambiguously
poor in Q4, with RBC's measures far exceeding those of any other
Canadian market and the area's own elevated historical norms.
"Despite extremely stretched affordability conditions facing homebuyers,
the Vancouver area's housing market found renewed vigour in 2014, with
resales reaching close to a three-year high by the fourth quarter,"
The supply of homes for sale, meanwhile, did not gather as much
momentum, RBC says. The demand-supply equation favoured sellers during
the second half of 2014, which ultimately heated up home prices in the
area allowing Vancouver to reclaim a spot among Canada's markets
exhibiting the fastest-rising price increases.
Developments regarding housing affordability were mixed in the Vancouver
area in the fourth quarter. RBC's measure fell quite noticeably by 1.2
percentage points to 82.4 per cent in the bungalow segment, rose
modestly by 0.2 percentage points to 39.9 per cent in the condo segment
and stayed unchanged at 85.6 per cent in the two-storey home segment.
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in Q4 of 2014 is as follows: Vancouver 82.4
(down 1.2 percentage points from Q3); Toronto 56.8 (up 0.8 percentage
points); Montreal 37.3 (unchanged); Ottawa 36.0 (up 0.2 percentage
points); Calgary 33.7 (down 0.6 percentage points); Edmonton 33.5 (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: Housing remains relatively affordable despite buffeted economic
Housing affordability was mainly unchanged in Alberta during Q4,
continuing to be fairly attractive relative to other provinces and
compared to historical averages. RBC's measure for bungalows fell by
0.4 percentage points, and remained unchanged for both condos and
Saskatchewan: Price declines translate to improved affordability
Price declines in the province during the fourth quarter of 2014
contributed to the fifth consecutive quarter of affordability
improvements. RBC's measures fell by 0.6 percentage points for both
bungalows and two-storey homes. The measure for condos, however, rose
by 0.6 percentage points.
Manitoba: Affordability improves across the provincial housing market
It became more affordable to buy a home in Manitoba during the fourth
quarter of 2014 with RBC's measures falling across all housing
categories (between 0.1 and 0.4 percentage points over the third
Ontario: Robust housing market conditions impact affordability
Ontario's housing market bucked the generally improving trend in
affordability across Canada in Q4, 2014. RBC's measures rose in all
categories between 0.2 percentage points and 1.0 percentage points.
Quebec: Broad-based improvements in affordability continue
Steady improvements in Quebec's housing affordability continued in the
fourth quarter of 2014 with RBC's measure declining across all
categories tracked. Measures fell by 0.6 percentage points for
two-storey homes and by 0.4 percentage points for both bungalows and
Atlantic Canada: Among the most affordable markets in Canada
The region's homebuyers continued to face some of the most affordable
conditions across the country in Q4 of 2014. RBC's affordability
measures fell for both the two-storey and bungalow segments, by 0.5 and
0.1 percentage points, respectively. The measure for the condo segment
edged higher by 0.1 percentage points.
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, 416-974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416-842-5635