TORONTO, Feb. 25, 2013 /CNW/ - Atlantic Canada's long-standing status as
an affordable housing market received another boost in the fourth
quarter of 2012, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
"Affordability levels in Atlantic Canada improved yet again in the last
quarter of 2012, with measures for two-storey homes and detached
bungalows dropping again and hitting levels that are at, or slightly
below their long-term averages and well below the national averages,"
said Craig Wright, senior vice-president and chief economist, RBC.
"Condos across the region became slightly more difficult to own for a
typical household budget in the fourth quarter; however, this comes on
the heels of a notable improvement in affordability around the mid year
RBC's housing affordability measures for the region, which capture the
pre-tax household income needed to service the costs of owning a home
at market values, were slightly lower in two out of three housing types
(a decrease in the measure represents an improvement in affordability).
The RBC measure for the benchmark detached bungalow fell by 0.5
percentage points to 31.9 per cent and the standard two-storey home by
1.0 percentage points to 36.3 per cent. The measure for condominium
apartments rose by 0.3 percentage points to 26.4 per cent.
"Even with little to no affordability-related tensions across the
region, there was a pull back in fourth quarter home resales,
cumulating in a 13 per cent drop since the start of 2012," added
Wright. "This dip in activity, coupled with a steady rise in the number
of homes newly listed for sale in 2012, resulted in considerably softer
market conditions in Atlantic Canada."
Fourth quarter home resales fell in the majority of local markets,
including: Halifax, Moncton, Fredericton and Saint John. Markets such
as Fredericton and Saint John in particular now favour buyers.
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities is as follows: Vancouver 82.2 per cent (down
2.6 percentage points from the previous quarter); Toronto 52.8 per cent
(down 0.4 percentage points); Montreal 39.3 per cent (down 0.9
percentage points); Ottawa 38.8 per cent (down 0.5 percentage points);
Calgary 38.1 per cent (up 0.2 percentage points) and Edmonton 30.7 per
cent (down 0.1 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) 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.
Highlights from across Canada:
British Columbia: housing affordability improving, still has to go the distance
While housing affordability in British Columbia still has a long way to
go before reaching less stressful levels, homebuyers in the province
received a welcome reprieve in the fourth quarter. RBC measures fell by
1.1 percentage points for condominium apartments and 1.0 percentage
point for detached bungalows. The two-storey home category experienced
a small increase (0.4 percentage points), though this followed a
substantial decline in the third quarter.
Alberta: vibrant market bolstered by attractive affordability
Brisk demand for the province's housing in 2012 was supported by a
strong provincial economy, accelerating population growth and
attractive affordability. Further improvement was registered in the
fourth quarter with measures falling between 0.1 and 0.2 percentage
Saskatchewan: affordability conditions buck the national trend
Tight market conditions at the beginning of 2012 had a lasting impact on
home prices in Saskatchewan, which climbed at some of the faster paces
in Canada in the fourth quarter. Rising property values caused
affordability to deteriorate in the fourth quarter with measures
increasing between 0.5 and 1.1 percentage points.
Manitoba: market vigour unhindered by slight affordability deterioration
Manitoba's housing market registered a banner year in 2012 with a record
14,000 existing homes sold, indicating that housing affordability
levels had little dissuasive effect on homebuyers in 2012. Although
measures for detached bungalows and condominiums deteriorated in the
fourth quarter, measures for two-storey homes remained unchanged. RBC's
measures for Manitoba continued to rank slightly above their long-term
average, suggesting that any affordability strain is likely minimal at
Ontario: affordability largely improves, tempering overall market conditions
The tightness that characterized Ontario's housing market in the early
part of 2012 gave way and a more balanced market was observed in the
second half of 2012, improving overall affordability conditions in the
province. RBC's measures inched lower by 0.1 and 0.3 percentage points
for the detached bungalow and condominium apartment, respectively,
while the measure for two-storey homes rose marginally by 0.1
Quebec: generally improving affordability tone is sustained
Quebec's housing affordability improved, for the most part, for the
third quarter in a row in the fourth quarter, yet this did little to
stimulate homebuyer demand as resale activity continued to cool in the
province. RBC measures fell for two-storey homes (by 1.1 percentage
points) and detached bungalows (by 0.3 percentage points), but rose for
condominium apartments (by 0.4 percentage points).
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at rbc.com/economics/market/.
For further information:
Robert Hogue, Senior Economist, RBC Economics Research, 416 974-6192
Elyse Lalonde, Manager, Communications, RBC Capital Markets, 416 842-5635