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
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.
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.
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.
- 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.
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.
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 rbc.com/economics/market/.
Please contact: Robert Hogue, Senior Economist, RBC Economics Research,
416-974-6192 Elyse Lalonde, Manager, Corporate Communications, RBC Capital
To view this news release in HTML formatting, please use the following URL:
NI: FIN ECOSURV
-0- Nov/22/2012 12:00 GMT
Press spacebar to pause and continue. Press esc to stop.