Saskatchewan bucks national trend as home ownership becomes slightly less affordable: RBC Economics

Saskatchewan bucks national trend as home ownership becomes slightly less 
affordable: RBC Economics 
TORONTO, Feb. 25, 2013 /CNW/ - Record high home resales and the resulting 
appreciation in property values last year led to a decline in Saskatchewan's 
housing affordability in the fourth quarter of 2012, according to the latest 
Housing Trends and Affordability Report, issued today by RBC Economics 
"Job market gains and decades-high inflows of migrants into Saskatchewan 
played a considerable role in the provincial home buying boom witnessed in the 
first half of 2012," said Craig Wright, senior vice-president and chief 
economist, RBC. "While market momentum slowed noticeably in the tail end of 
the year, it wasn't enough to curb home prices in the province, which 
continued to climb at some of the faster paces in Canada in the fourth 
The RBC report notes that while housing market activity in Saskatchewan slowed 
markedly in the latter stages of the year, nearly 14,000 homes were sold in 
2012, which sets a new record for the province. 
The RBC 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, increased across all housing types (an increase in the 
measure represents deterioration in affordability). 
RBC's measure for the benchmark detached bungalow rose by 0.7 percentage 
points to 39.0 per cent, the standard two-storey home increased by 1.1 
percentage points to 42.8 per cent and the measure for condominium apartments 
increased by 0.5 percentage points to 26.8 per cent. 
RBC's housing affordability measure for the benchmark detached bungalow in 
Canada's largest cities is as follows: Vancouver 82.2 per cent (down 2.6 
percentage points from the previous quarter); Toronto 52.8 per cent (down 0.4 
percentage points); Montreal 39.3 per cent (down 0.9 percentage points); 
Ottawa 38.8 per cent (down 0.5 percentage points); Calgary 38.1 per cent (up 
0.2 percentage points) and Edmonton 30.7 per cent (down 0.1 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:
        housing affordability improving, still has to go the distance
        While housing affordability in British Columbia still has a
        long way to go before reaching less stressful levels,
        homebuyers in the province received a welcome reprieve in the
        fourth quarter. RBC measures fell by 1.1 percentage points for
        condominium apartments and 1.0 percentage point for detached
        bungalows. The two-storey home category experienced a small
        increase (0.4 percentage points), though this followed a
        substantial decline in the third quarter.
    --  Alberta:
        vibrant market bolstered by attractive affordability
        Brisk demand for the province's housing in 2012 was supported
        by a strong provincial economy, accelerating population growth
        and attractive affordability. Further improvement was
        registered in the fourth quarter with measures falling between
        0.1 and 0.2 percentage points.
    --  Manitoba:
        market vigour unhindered by slight affordability deterioration
        Manitoba's housing market registered a banner year in 2012 with
        a record 14,000 existing homes sold, indicating that housing
        affordability levels had little dissuasive effect on homebuyers
        in 2012. Although measures for detached bungalows and
        condominiums deteriorated in the fourth quarter, measures for
        two-storey homes remained unchanged. RBC's measures for
        Manitoba continued to rank slightly above their long-term
        average, suggesting that any affordability strain is likely
        minimal at this point.
    --  Ontario:
        affordability largely improves, tempering overall market
        The tightness that characterized Ontario's housing market in
        the early part of 2012 gave way and a more balanced market was
        observed in the second half of 2012, improving overall
        affordability conditions in the province. RBC's measures inched
        lower by 0.1 and 0.3 percentage points for the detached
        bungalow and condominium apartment, respectively, while the
        measure for two-storey homes rose marginally by 0.1 percentage
    --  Quebec:
        generally improving affordability tone is sustained
        Quebec's housing affordability improved, for the most part, for
        the third quarter in a row in the fourth quarter, yet this did
        little to stimulate homebuyer demand as resale activity
        continued to cool in the province. RBC measures fell for
        two-storey homes (by 1.1 percentage points) and detached
        bungalows (by 0.3 percentage points), but rose for condominium
        apartments (by 0.4 percentage points).
    --  Atlantic Canada:
        housing continues to be affordable
        Affordability in the Atlantic region received another boost in
        the fourth quarter, with RBC measures falling for two-storey
        homes (by 1.0 percentage points) and detached bungalows (by 0.5
        percentage points), keeping levels well below their respective
        national averages. The measure for condominium apartments rose
        modestly by 0.3 percentage points, though this followed a more
        sizable drop in the previous period.

The full RBC Housing Trends and Affordability report is available online, as 
of 8 a.m. ET today, at

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


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