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Housing Affordability in Atlantic Canada Steady as She Goes: RBC Economics

Housing Affordability in Atlantic Canada Steady as She Goes: RBC Economics 
TORONTO, Nov. 22, 2012 /CNW/ - Housing affordability in Atlantic Canada showed 
little sign of changing pace in the third quarter, according to the latest 
Housing Trends and Affordability Report, issued today by RBC Economics 
Research. 
"Atlantic Canada's housing market has been pretty stable over the past three 
years and remains attractive, affordability-wise, compared to the majority of 
other regions," said Craig Wright, senior vice-president and chief economist, 
RBC. "Our affordability measures haven't shown discernable trends on either 
the up or down sides, so we see it as business as usual for the region." 
RBC's housing affordability measures for the region, which capture the 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 0.2 percentage points to 32.3 per cent, the standard 
two-storey home eased by 0.7 percentage points to 37.3 percent and the measure 
for condominium apartments declined by 0.5 percentage points to 26.0 per cent. 
RBC notes that despite muted affordability-related stress on the region's 
homeowners, resales fell across the majority of local markets - Halifax, 
Moncton, Saint John and Newfoundland - in the third quarter, causing market 
conditions to erode slightly. Still, the region is considered balanced. 
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
        affordability
        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.
    --  Quebec:
        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.

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 
Markets, 416-842-5635

SOURCE: RBC

To view this news release in HTML formatting, please use the following URL: 
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CO: RBC
ST: Ontario
NI: FIN ECOSURV 

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