TORONTO, June 22, 2015 /CNW/ - Quebec's housing affordability
progressively improved during 2014 and continued to do so in the first
quarter of 2015, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
"During the past year, improvements in Quebec's housing affordability
marked some of the more significant developments among the provinces.
Provincial home buyers enjoyed the most affordable conditions in nearly
six years for single-family homes and 10 years for condos," said Craig
Wright, senior vice-president and chief economist, RBC. "Still, these
more favourable conditions did not constitute a major pull for home
buyers with market activity remaining below historic averages."
In the first quarter, home resales were still 5.4 per cent below the
10-year average, although activity picked up substantially this spring.
After a year of stagnation in 2014, the resumption of job creation -
with close to 50,000 new jobs created between January and May of 2015 -
has likely begun to revitalize housing demand, RBC says.
"New jobs and more favourable affordability conditions should bode well
for home resales in the period ahead," added Wright.
The RBC Housing Affordability measures, which capture the province's
proportion of pre-tax household income needed to service the costs of
owning a home at market values, decreased across all housing categories
in Q1 2015 (a decrease in the measure represents an improvement in
RBC's measures fell in all three categories in the latest period: by 0.3
percentage points for both bungalows and two-storey homes, to 32.9 per
cent and 41.1 per cent, respectively, and by 0.1 percentage points to
25.5 per cent for condos.
Montreal's affordability continues in positive direction
RBC notes that housing affordability in Montreal continued to steadily
improve in the first quarter of 2015.
"After a series of sizeable improvements last year, further progress in
Montreal's housing affordability during Q1 allowed home buyers in the
area to experience some of the larger reductions in the burden of
owning a home among Canada's biggest cities," added Wright.
Property values in the city stagnated, and even diminished slightly in
some cases, earlier this year in the face of soft demand and strong
supply for condos, RBC says. Elevated levels of new condo construction
in recent years have resulted in a high inventory of unsold condos in
the area, which will likely take time to clear.
"The good news is that home buyer demand picked up noticeably this
spring, likely in part reflecting a strengthening in local employment,"
First-quarter affordability levels for Montreal showed improvements in
all three housing categories. RBC's measures fell 0.4 percentage points
to 47.8 per cent for two-storey homes, 0.2 percentage points to 37.2
per cent for bungalows, and 0.1 percentage points to 29.2 per cent for
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.
Atlantic Canada: affordability still attractive and improving
The lingering effect of earlier softness in home resale markets led to
further improvement in housing affordability in the Atlantic region in
Q1. RBC's affordability measures fell 0.7 percentage points for
bungalows and 0.5 percentage points for two-storey homes. The measure
for condos was unchanged.
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