Manitoba's housing market unhindered by slight affordability deterioration: RBC Economics

Manitoba's housing market unhindered by slight affordability deterioration: 
RBC Economics 
TORONTO, Feb. 25, 2013 /CNW/ - Manitoba's housing market had a banner year in 
2012 with a record 14,000 existing homes sold, despite a slight deterioration 
in affordability that occurred late in the year, according to the latest 
Housing Trends and Affordability Report released today by RBC Economics 
"Comparatively speaking, the cooling in housing activity that took place 
across the country in the latter half of last year was fairly modest in 
Manitoba - quite vigorous housing activity persisted," said Craig Wright, 
senior vice-president and chief economist, RBC. "Our affordability measures 
for Manitoba continue to stand just slightly above historical averages, 
suggesting that any affordability related strain is likely minimal at this 
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, deteriorated somewhat in the fourth quarter of 2012 (an 
increase in the measure represents deterioration in affordability). RBC's 
measure for detached bungalows rose by 0.8 percentage points to 38.1 per cent 
and for condominium apartments increased by 0.3 percentage points to 24.0 per 
cent. The measure for two-storey homes was unchanged at 38.5 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.
    --  Saskatchewan:
        affordability conditions buck the national trend
        Tight market conditions at the beginning of 2012 had a lasting
        impact on home prices in Saskatchewan, which climbed at some of
        the faster paces in Canada in the fourth quarter. Rising
        property values caused affordability to deteriorate in the
        fourth quarter with measures increasing between 0.5 and 1.1
        percentage points.
    --  Ontario:
        affordability largely improves, tempering overall market
        conditions--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 points.
    --  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

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


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