MONTREAL, Jan. 24 /CNW/ - Quebec's housing affordability continued to
deteriorate throughout 2007, according to the latest Housing Affordability
report released today by RBC Economics.
"Modest price gains, combined with some mortgage rate relief in 2008,
should translate into an overall improvement in housing affordability," said
Derek Holt, assistant chief economist, RBC. "The market is well balanced with
new listings coming to market, satisfying existing demand."
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 37 per cent of income in Quebec. The amount of median
pre-tax income required to purchase a condo in Quebec was 29 per cent. For a
standard townhouse, the measure stood at 32 per cent, and for a two-storey
home at 45 per cent.
According to the RBC report, Quebec's house prices have grown
consistently in the five per cent range each year and are expected to continue
to do so in 2008. Central Canada's weakening economic growth will reinforce an
already softening market. New home construction is expected to taper off with
starts predicted to dip by 2,500 units this year and a further 7,000 units in
In contrast to a number of changing market conditions across the country,
Montreal's housing affordability has remained somewhat more stable. House
price growth continues to rise at an annual rate of 5 per cent across all
housing segments, and household income growth has also been decent. Rising
mortgage rates contributed to the deterioration in affordability last year,
but the underlying housing market fundamentals are still supportive of a
healthy outlook for 2008.
"Prospective homeowners in Montreal can look for modest relief as
mortgage rates recede and price gains soften," Holt added. "Not much change in
overall conditions is expected as sales-to-listings ratios are consistently
signaling a balanced market."
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.
RBC's Affordability measures for a detached bungalow for Canada's largest
cities are as follows: Vancouver, 72 per cent, Calgary, 46 per cent, Toronto,
46 per cent, Montreal, 37 per cent and Ottawa, 32 per cent.
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.
Highlights from across Canada:
- British Columbia: Housing affordability reached into uncharted
territory late last year as affordability deteriorated to its worst
level since 1985 when RBC started tracking conditions. Modest
improvements are expected for 2008.
- Alberta: Many prospective homebuyers were priced out of the market
last year as housing affordability conditions eroded, pushing markets
into unsustainable territory. With a softer influx of migrants, the
housing market is poised for a significant slowdown and improved
- Saskatchewan: Housing affordability deteriorated sharply across all
home segments last year as a sudden influx of migrants strained
existing housing capacity. In 2008, housing affordability conditions
are expected to stabilize.
- Manitoba: The province's housing market is still running at full
tilt. Affordability should improve as rising costs start to weigh on
demand and help rebalance the market in 2008.
- Ontario: Income growth is expected to cool amidst toughening economic
conditions in the province. On balance, our affordability forecast in
2008 points to overall improving conditions as mortgage rates drift
lower and price gains moderate even further.
- Atlantic region: Strong house price gains and rising mortgage rates
chipped away at affordability conditions in 2007. In 2008, Atlantic
Canada is expected to move onto a softer growth trajectory as housing
construction activity gears down.
The full RBC Housing Affordability report is available online, as of
8 a.m. E.S.T. today at www.rbc.com/economics/market/pdf/house.pdf.
Jimmy Jean sera disponible pour des commentaries en français.
For further information:
For further information: Derek Holt, RBC Economics, (416) 974-6192;
Raymond Chouinard, RBC Media Relations, (514) 874-6556