Manitoba remains top spot to buy a condo, says RBC Economics

    TORONTO, March 15 /CNW/ - While affordability deteriorated in the first
half of 2006, the third and fourth quarters marked a significant turnaround
for Manitoba, according to the latest Housing Affordability report released
today by RBC Economics.
    "The strongest improvement came from the condo sector, which reversed
much of the deterioration that occurred in the early part of 2006," said Derek
Holt, assistant chief economist, RBC. "In retaining its title as the most
affordable province to purchase a condo, Manitoba continues to remain an
attractive market for potential new home buyers."
    The RBC Affordability measure for Manitoba, which captures the proportion
of pre-tax household income needed to service the costs of owning a home,
improved for all housing types with a detached bungalow at 32.8 per cent. A
standard two-story home moved to 34.1 per cent, a standard townhouse to 20.1
per cent and a standard condo to 18.1 per cent.
    According to the report, detached bungalows, townhouses and condos all
witnessed fourth quarter price declines, with only the cost of a two-storey
home increasing. Unlike its neighbours to the west, Manitoba's housing market
has been largely driven by fundamentals such as income growth and market
conditions are expected to continue to soften throughout the year.
    The Housing Affordability measure, which RBC has compiled since 1985, is
based on the costs of owning a detached bungalow, a reasonable property
benchmark for the housing market. Alternative housing types are also presented
including a standard two-storey home, a standard townhouse and a standard
condo. The higher the reading, the more costly it is to afford a home. For
example, an Affordability measure 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.
    The report also looked at mortgage carrying costs relative to incomes for
a broader sampling of smaller cities across the country, including Winnipeg,
where affordability conditions improved. For these smaller cities, RBC has
used a narrower measure of housing affordability that only takes mortgage
payments relative to income into account.
    RBC's Affordability measure for detached bungalows in Canada's largest
cities is as follows: Vancouver 68.5 per cent, Calgary 40.9 per cent, Toronto
42.6 per cent, Montreal 35.3 per cent and Ottawa 30 per cent.

    Highlights from across Canada:
    -   British Columbia: The final quarter of 2006 provided some relief for
        B.C. homeowners with affordability improving for the two-storey and
        detached bungalow segments. However, condos and townhomes continued a
        fifth straight quarter of deterioration. Overall, B.C.'s housing
        affordability should continue to improve over the next year.
    -   Alberta: Since the start of 2005, housing affordability across
        Alberta has been eroding at an aggressive pace. While the most recent
        quarter reported another across-the-board deterioration, the pace of
        erosion appears to have topped out and has slowed significantly.
    -   Saskatchewan: For a fifth consecutive quarter, affordability eroded
        in three out of four home classes - detached bungalow, townhouse and
        condo. Saskatchewan's annual house price gains, which are in the
        10 per cent range, outweighed any mortgage rate relief or household
        income growth that would have helped offset costs.
    -   Ontario: As Ontario's housing market continued to cool, affordability
        improved across all classes. Softer price growth, a decline in
        mortgage rates and lower utility bills combined to bring monthly
        payments down by one to two per cent for all four housing segments.
    -   Quebec: Led by improvement in two-store homes, housing affordability
        recovered significantly for the first time in over a year as the
        long-anticipated soft landing continues to unfold. Supply and demand
        fundamentals in Quebec's housing market are cooling off in tandem and
        the effects are overflowing to improve affordability conditions for
        prospective homeowners.
    -   Atlantic region: Strong household income growth, lower monthly
        utility bills and a modest drop in mortgage rates contributed to
        improve conditions across Atlantic Canada.

    The full RBC Housing Affordability report is available online, as of
8 a.m. E.D.T. today at

For further information:

For further information: Derek Holt, RBC Economics, (416) 974-6192;
Jackie Braden, RBC Media Relations, (416) 974-2124

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