Homebuyers enjoyed the most affordable conditions in more than five
years for single family homes and in nearly 10 years for condos
TORONTO, March 3, 2015 /CNW/ - On the heels of steady improvements throughout the first three quarters
of last year, Quebec's housing affordability conditions broadly
improved in the final quarter of 2014, according to the latest Housing Trends and Affordability Report issued today by RBC Economics.
"The improved affordability picture is the upside of otherwise
predominantly soft housing market conditions in Quebec," said Craig
Wright, senior vice-president and chief economist, RBC. "Home resales
picked up in the second half of 2014, but remained 4.1 per cent below
the 10-year average, and an increase in supply of homes for sale gave
more sway to buyers in setting prices, leading to price declines across
The RBC housing affordability measures, which capture the province's
proportion of pre-tax household income that would be needed to service
the costs of owning a home at current market values in Quebec, improved
for all housing types in Q4 of 2014 (a decline in the measure
represents an improvement in affordability). RBC's measures fell by 0.6
percentage points for two-storey homes to 41.3 per cent and by 0.4
percentage points for both bungalows and condos, to 33.1 per cent and
25.6 per cent, respectively.
Montreal area: Affordability improvements take a pause
Fourth quarter RBC affordability measures for the Montreal area were
little changed from the prior quarter, though this followed substantial
improvement earlier last year. RBC says that despite flat readings for
bungalows (37.3 per cent) and condos (29.2 per cent), and a modest
decline of 0.2 percentage points for two-storey homes (to 48.1 per
cent), there is a bright spot.
"Our measures for Montreal during the final months of 2014 were the most
improved versus year-ago levels among Canada's biggest metropolitan
markets," said Wright. "This is largely thanks to weakness in prices,
especially during the first half of last year."
RBC says that results show resale activity perked up during the latter
half of last year from deeply depressed levels. In Q4, home resales
were 1.2 per cent higher than they were a year earlier; however, they
stood 20 per cent below the 10-year average for the quarter.
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in Q4 of 2014 is as follows: Vancouver 82.4
(down 1.2 percentage points from Q3); Toronto 56.8 (up 0.8 percentage
points); Montreal 37.3 (unchanged); Ottawa 36.0 (up 0.2 percentage
points); Calgary 33.7 (down 0.6 percentage points); Edmonton 33.5 (up
0.1 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
homeownership 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: Small improvement in affordability conditions
Housing affordability slightly improved across all categories of homes
measured by RBC, primarily reflecting stronger household income arising
from brighter economic prospects in the province. During Q4, RBC's
measures eased between 0.1 and 0.7 percentage points.
Alberta: Housing remains relatively affordable despite buffeted economic
Housing affordability was mainly unchanged in Alberta during Q4,
continuing to be fairly attractive relative to other provinces and
compared to historical averages. RBC's measure for bungalows fell by
0.4 percentage points, and remained unchanged for both condos and
Saskatchewan: Price declines translate to improved affordability
Price declines in the province during the fourth quarter of 2014
contributed to the fifth consecutive quarter of affordability
improvements. RBC's measures fell by 0.6 percentage points for both
bungalows and two-storey homes. The measure for condos, however, rose
by 0.6 percentage points.
Manitoba: Affordability improves across the provincial housing market
It became more affordable to buy a home in Manitoba during the fourth
quarter of 2014, with RBC's measures falling across all housing
categories (between 0.1 and 0.4 percentage points over the third
Ontario: Robust housing market conditions impact affordability
Ontario's housing market bucked the generally improving trend in
affordability across Canada in Q4, 2014. RBC's measures rose in all
categories between 0.2 percentage points and 1.0 percentage points.
Atlantic Canada: Among the most affordable markets in Canada
The region's homebuyers continued to face some of the most affordable
conditions across the country in Q4 of 2014. RBC's affordability
measures fell for both the two-storey and bungalow segments, by 0.5 and
0.1 percentage points, respectively. The measure for the condo segment
edged higher by 0.1 percentage points.
The full RBC Housing Trends and Affordability report is available online as of 8 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