Quebec's Housing Affordability Improves for Second Straight Quarter: RBC Economics

Quebec's Housing Affordability Improves for Second Straight Quarter: RBC 

    --  Home resale activity weakens slightly, slows upward pressure on
    --  Montreal-area affordability remains relatively even-keeled

TORONTO, Nov. 22, 2012 /CNW/ - Quebec's housing affordability improved in the 
third quarter of 2012 for the second consecutive quarter, and returned to 
levels witnessed in late 2011, according to the latest Housing Trends and 
Affordability Report, released today by RBC Economics Research.

"Much like many of the other markets in Canada, home resale activity softened 
in Quebec in the middle of this year, slowing upward pressure on prices," 
explained Craig Wright, senior vice-president and chief economist, RBC. "While 
we have seen some loosening in the Quebec market recently, conditions 
generally remained balanced."

According to RBC, affordability levels in Quebec stand slightly above the 
historical average, which indicates that the province's prospective homebuyers 
may be feeling a slight pinch budget-wise if they bought a home at the current 
market prices.

RBC's 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, edged lower across all housing types (a decrease in the measure 
represents an improvement in affordability). The RBC measure for the benchmark 
detached bungalow fell by 0.8 percentage points to 33 per cent, while the 
standard two-storey home and condominium categories fell by 0.6 percentage 
points to 42 per cent and 27 per cent, respectively.

Montreal-area market mirrors developments seen across Canada

"Developments in the Montreal-area housing market were very similar to the 
most of Canada's major cities in the third quarter," said Wright. 
"Affordability levels in the city remained slightly stretched, but improved 
for the most part as home resales slowed, prices moderated, and as market 
conditions loosened but stayed largely balanced."

RBC notes that the only exception to this improved affordability picture has 
been a slight deterioration in the measure for detached bungalows, which 
inched higher by 0.1 percentage points in the third quarter in Montreal. The 
measures for two-storey homes and condominium apartments fell by 0.5 
percentage points to 51.7 per cent and 31.7 per cent, respectively.

Since 2007, two-storey homes have been less affordable than they were 
historically, putting some stress on the area and pushing measures above both 
the long-term and historical averages. Still, RBC indicates that there has 
been little evidence of undue affordability stress outside of this market 

Where housing affordability stands in Canada

RBC's housing affordability measure for the benchmark detached bungalow in 
Canada's largest cities is as follows: Vancouver 83.2 per cent (down 5.8 
percentage points from the previous quarter); Toronto 52.4 per cent (down 0.7 
percentage points); Montreal 40.2 per cent (up 0.1 percentage points); Ottawa 
38.7 per cent (down 0.4 percentage points); Calgary 38.3 per cent (down 0.7 
percentage points) and Edmonton 31.1 per cent (down 0.6 percentage points).

The RBC Housing Affordability Measure, which has been compiled since 1985, is 
based on the 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.

Highlights from across Canada:
    --  British Columbia:
        Affordability hurdles still tough to clear
        British Columbia's housing market experienced improvements in
        the third quarter of 2012, and yet, affordability conditions
        remained the poorest across Canada. RBC measures fell between
        2.0 percentage points and 3.7 percentage points, the largest
        drops across Canada. The situation remains less severe
        elsewhere in the province; the share of income needed to carry
        ownership costs in Victoria, for instance, is almost half the
        share in Vancouver for some housing types.
    --  Alberta:
        Attractive affordability contributes to market renaissance
        Alberta's housing market enjoyed firm and steady resale
        activity, balanced demand-supply conditions, moderate home
        price increases, and improved housing affordability. Third
        quarter affordability measures for the province edged lower -
        between 0.2 percentage points and 0.4 percentage points
        -remaining below their long-term and the national averages.
    --  Saskatchewan:
        Little evidence of affordability strain
        Significant deteriorations in housing affordability in the
        second quarter in Saskatchewan were largely reversed in the
        third with RBC measures in the province falling between 0.9
        percentage points and 1.3 percentage points. The measures stood
        just slightly above their long term averages for all housing
        categories, indicating little in the way of undue affordability
        induced strain on the market.
    --  Manitoba
        - Market losing some of its steam; minimal pressure on
        Declining housing prices spurred a notable improvement in
        housing affordability in Manitoba over the third quarter. RBC
        measures fell between 0.6 percentage points and 1.6 percentage
        points, which fully unwound the deterioration that occurred in
        the prior quarter. Provincial affordability levels sit slightly
        higher than their averages since the mid 1980s, but remain well
        below the corresponding national averages.
    --  Ontario:
        More balanced conditions help to ease affordability stress
        Ontario's housing affordability eased somewhat in the third
        quarter, but remains under mild pressure, most notably in the
        two-storey home segment. RBC measures declined between 0.5
        percentage points and 1.1 percentage points in the province,
        which, in effect, rolled back the two consecutive quarterly
        increases that took place in the first half of this year.
    --  Atlantic:
        Affordability position remaining quite stable
        Housing affordability in Atlantic Canada improved slightly
        across the board, with RBC measures in the region inching lower
        by 0.2 percentage points to 0.7 percentage points relative to
        the previous quarter. Affordability measures have been
        reasonably stable over the past three years in the region,
        showing no discernable trends on either the up or down sides.

The full RBC Housing Trends and Affordability report is available online, as 
of 7 a.m. ET today, at

Please contact: Robert Hogue, Senior Economist, RBC Economics Research, 
416-974-6192 Elyse Lalonde, Manager, Corporate Communications, RBC Capital 
Markets, 416-842-5635


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-0- Nov/22/2012 12:00 GMT

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