Saskatchewan's Housing Affordability Improves Thanks to Steady Household
Income Gains: RBC Economics
TORONTO, Nov. 22, 2012 /CNW/ - The significant deterioration in housing
affordability in the second quarter in Saskatchewan was largely reversed in
the third quarter, according to the latest Housing Trends and Affordability
Report, issued today by RBC Economics Research. The report indicates that a
moderation in home price increases and increased household incomes contributed
to an improvement in affordability in the province.
"Homeowners' budgets in Saskatchewan were somewhat stretched in the second
quarter as home prices spiked, particularly in markets like Saskatoon and
Regina," said Craig Wright, senior vice-president and chief economist, RBC.
"While property appreciation continued in the third quarter, gains were
comparatively modest and any impact on affordability was offset by rising
RBC notes that Saskatchewan's housing affordability levels were far from
excessive, with measures standing just above their long-term averages for all
housing categories, indicating little in the way of undue
affordability-induced strain on the market.
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, declined across all housing types (a decrease in the measure
represents an improvement in affordability). The RBC measure for the benchmark
detached bungalow fell by 0.9 percentage points to 38.2 per cent, the standard
two-storey home eased by 1.3 percentage points to 41.7 percent and the measure
for condominium apartments declined by 1.0 percentage points to 26.2 per cent.
"Housing market activity in the province has moderated since the spring,
providing some slack to the tighter conditions that Saskatchewan experienced
earlier in the year," added Wright. "Nonetheless, given the strong start to
the year, home resales remain on pace to set a new record high in the province
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.
- 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.
Second straight affordability improvement
Housing affordability improved for the second straight quarter
in Quebec, with RBC's measures edging lower across all housing
types in the province, between 0.6 percentage points and 0.8
percentage points, in the third quarter. For the most part,
levels are only slightly worse than the average historical
level, indicating that prospective homebuyers in Quebec may
feel minimally stretched budget-wise, if they bought a home at
current market prices.
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
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