MONTREAL, June 15 /CNW/ - Quebec's housing affordability modestly
deteriorated across all segments in the most recent quarter as price gains
outstripped income growth, according to the latest Housing Affordability
report released today by RBC Economics.
"Quebec's housing market has had a soft landing as house price gains have
leveled off while still remaining positive," said Derek Holt, assistant chief
economist, RBC. "Despite softer housing markets, which are expected to persist
through most of 2007, homeowners can still look to retain the equity they have
accumulated in their homes."
The RBC Housing Affordability report, which measures the proportion of
pre-tax household income needed to service the costs of owning a detached
bungalow, was about 35 per cent of income. The amount of median pre-tax income
required to purchase a condo in Quebec was about 28 per cent. For a standard
townhouse, the measure stood at 31 per cent and for a two-storey home at 43
RBC notes that Quebec's housing starts posted a decline in 2006 and are
expected to remain weak through the remainder of the year as markets adjust.
The combination of a gradual clearing of the inventory decks and weaker price
gains could help insulate against the full impact of higher interest rates
over the next year.
In Montreal, housing affordability deteriorated across all four home
segments to 35 per cent, as rising prices overpowered modest income gains.
Montreal is among one of the softer markets in terms of supply and demand
pressures. The sales-to-listings ratio continues to signal a balanced market,
with consistent but modest annual price gains of between three and five per
"Overall, Montreal's housing market has managed to achieve an orderly,
controlled slowdown which will continue to unfold over the remainder of the
year," said Holt.
RBC's Affordability measure for a detached bungalow in Canada's largest
cities is as follows: Vancouver 68 per cent, Toronto 43 per cent, Calgary 40
per cent, Montreal 35.4 per cent and Ottawa 30.5 per cent.
Also included in the report are housing affordability conditions for
Quebec City and a broader sampling of smaller cities across the country. For
these smaller cities, RBC has used a narrower measure of housing affordability
that only takes mortgage payments relative to income into account.
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 measure, 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.
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.
- Manitoba: Manitoba still remains the most affordable province to own
a home in the country, despite the fact that all four housing types
saw a decline in affordability. The risk of a market slowdown for
Manitoba is much less pronounced, compared to other western
- 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
- 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 www.rbc.com/economics/market/pdf/house.pdf.
For further information:
For further information: Derek Holt, RBC Economics, (416) 974-6192;
Raymond Chouinard, RBC Media Relations, (514) 874-6556