Manitoba still remains the most affordable province in the country in which to own a home, says RBC Economics

    TORONTO, June 15 /CNW/ - While affordability deteriorated across all
housing classes as Manitoba's housing market gained momentum in the first
quarter of 2007, it remains the most affordable province in which to own a
home, according to the latest Housing Affordability report released today by
RBC Economics.
    "Housing conditions have been tight for the past four or five years,
creating fairly stable support for consistent house price gains," said Derek
Holt, assistant chief economist, RBC. "This recent deterioration in
affordability was mainly driven by a jump in prices. However, the annual pace
of price growth appears to be leveling off as income gains remain strong."
    The RBC Affordability report for Manitoba, which measures the proportion
of pre-tax household income needed to service the costs of owning a home,
deteriorated slightly for all housing types. The detached bungalow
deteriorated slightly to 33 per cent, a standard two-story home to 34 per
cent, a standard townhouse to 20 per cent and a standard condo to 18 per cent.
    According to the report, the risk of a market slowdown for Manitoba is
much less pronounced, compared to other western provinces, where housing
markets have swung more rapidly into excess demand territory with more
downside potential ahead.
    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 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.
    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 deteriorated. 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 a detached bungalow for Canada's largest
cities is as follows: Vancouver 68 per cent, Calgary 40 per cent, Toronto 43
per cent, Montreal 35.4 per cent and Ottawa 30.5 per cent.

    Highlights from across Canada:
    -  British Columbia: Solid income gains outstripped softer house price
       growth to make way for another slight improvement in housing
       affordability for two-storey homes. The improvement is welcome relief
       for many prospective homeowners attempting to tap into the already
       elevated property market. Affordability of the remaining three home
       segments deteriorated as prices continued to move higher.

    -  Alberta: Economic fundamentals - including strong wages, low
       unemployment and net provincial migration - are still favouring
       Alberta's housing market. However, the frenzied pace of activity
       exhibited through much of 2006 is starting to moderate.

    -  Saskatchewan: After several years of stability, Saskatchewan's housing
       affordability eroded sharply in the first quarter of 2007. Two-storey
       homes were hit the hardest, as the province's housing market jumped
       into a severe state of excess demand. An influx of migrants, which is
       at a 25 year high, complemented a pick-up in wage growth and caught
       the housing supply off guard, resulting in soaring prices and a rapid
       decline in affordability. Caution is warranted because the staying
       power of this shift in migration is uncertain at this early stage.

    -  Ontario: Healthy income gains were offset by modest house price
       growth, creating very little movement in affordability across all
       housing classes. Annual house price gains continue to bounce between
       three-to-five per cent, as Ontario's housing market continues to level

    -  Quebec: Housing affordability modestly deteriorated across all housing
       segments. However, Quebec's housing market has had a soft landing as
       house price gains have leveled off while remaining positive. Despite
       softer housing markets that are expected to persist through most of
       2007, homeowners can still look to retain the equity they have
       accumulated in their homes.

    -  Atlantic region: Atlantic Canada's two-storey home segment continued
       to post improvements in affordability for the first quarter of 2007
       while condos, detached bungalows and townhouses witnessed a slight
       deterioration in affordability.

    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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