TORONTO, June 22, 2015 /CNW/ - The lingering effect of earlier softness
in home resale activity led to further improvement in housing
affordability in the Atlantic region during the first quarter of 2015,
according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
"The affordability of owning a home in the Atlantic region is still
attractive and improving for home buyers - current affordability
conditions are some of the best across Canada," said Craig Wright,
senior vice-president and chief economist, RBC.
RBC says the cost of owning a home in the region generally has been
easing since late-2013 thanks to stretches of weak demand and a rising
number of homes for sale in key markets.
In the first quarter of 2015, home resale activity slowed in part due to
poor weather conditions. RBC notes that Halifax, Moncton and Saint John
saw resales fall noticeably relative to the fourth quarter of 2014.
Despite weaker resales, RBC says demand-supply conditions in Q1
generally tightened because new listings plunged across many local
markets - likely an outcome of adverse winter weather.
"While demand-supply conditions firmed up in the first quarter, prices
for single-detached homes edged lower - this contributed to drops in
affordability measures for the Atlantic region, which stand at their
lowest levels in nearly 10 years," said 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 single-detached homes and
remained flat for condos (a decrease in the measure represents an
improvement in affordability). RBC's measures decreased 0.7 percentage
points to 29.4 per cent for bungalows and 0.5 percentage points to 34.0
per cent for two-storey homes. The measure for condos was unchanged at
25.0 per cent, still within close range of an eight-year low.
During Q1 2015, affordability measures at the national level edged lower
by 0.3 percentage points to 27.1 per cent for condominiums and 0.2
percentage points to 47.9 per cent for two-storey homes. The measure
for detached bungalows was unchanged at 42.7 per cent.
RBC's Housing Affordability measure for the benchmark detached bungalow
in Canada's largest cities in Q1 2015 is as follows: Vancouver 85.6 (up
2.8 percentage points from Q4 2014); Toronto 57.3 (up 0.6 percentage
points); Montreal 37.2 (down 0.2 percentage points); Ottawa 35.4 (down
0.6 percentage points); Calgary 32.8 (down 1.0 percentage points);
Edmonton 32.8 (down 0.8 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
home ownership 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: Vancouver skews provincial affordability
Q1 developments varied by housing categories, but still signaled
greater-than-average pressure on affordability. RBC's measures eased
0.4 percentage points for condos and 0.1 percentage points for
two-storey homes, and rose 1.0 percentage points for bungalows.
Alberta: plummeting oil prices contributed to improvement in affordability
Housing affordability improved significantly across the province during
the first quarter, with RBC measures falling across all categories
(between 1.0 and 0.6 percentage points).
Saskatchewan: slower resale activity combined with moderating household income mutes
impact on affordability
Home resales plummeted more than 16 per cent in the province during Q1,
contributing to price declines across housing segments. The impact on
affordability was partly muted by a moderation in household income.
RBC's measures fell 0.1 percentage points for condos, rose 0.3
percentage points for bungalows and remained unchanged for two-storey
Manitoba: affordability stands close to long-run averages
Affordability of single-detached homes and condos evolved in opposite
directions in Q1. RBC's measures rose by 0.3 percentage points for both
bungalows and two-storey homes, while the measure for condos fell
noticeably by 1.1 percentage points.
Ontario: affordability theme continues to be split
For the past four years, owning a single-detached home at market prices
in the province has become less and less affordable, whereas the weight
of owning a condo has remained fairly constant. RBC's measures for
bungalows and two-storey homes rose by 0.3 percentage points, while the
measure for condos edged lower by 0.2 percentage points.
Quebec: affordability at multi-year best levels
After remaining steady for years, housing affordability improved in the
province over the course of 2014 and the trend continued in Q1 2015.
RBC's measures fell across all three categories tracked (between 0.3
and 0.1 percentage points).
The full RBC Housing Trends and Affordability report is available online as of 8:00 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