Two-storey homes remain an affordable option in Atlantic Canada: RBC

    TORONTO, June 15 /CNW/ - Atlantic Canada's two-storey home segment
continued to post improvements in affordability for the first quarter of 2007,
according to the latest housing report released today by RBC Economics.
    "Even though affordability of condos, detached bungalows and townhouses
in Atlantic Canada deteriorated, the housing market remains well balanced,"
said Derek Holt, assistant chief economist, RBC.
    The RBC Housing Affordability report for the Atlantic provinces, which
measures the proportion of pre-tax household income needed for maintaining the
costs of owning a home, improved to 34 per cent for a standard two-storey
home, but saw a slight deterioration for the detached bungalow standing at
30 per cent, the standard townhouse at 25 per cent, and 25 per cent for a
standard condo.
    According to the report, there continues to be a substantial variation in
housing market conditions across the region. Halifax and Saint John are in a
position of moderate excess demand for housing, signaling a market that is
still supportive of price gains over the upcoming year. However in St. John's,
the market has softened with only modest price growth.
    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.
    Also included in the report are housing affordability conditions for a
broader sampling of select cities across the country, including St. John's,
Saint John, and Halifax. For these select 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 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.

    -   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
        level off.

    -   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.

    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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