Quebec's housing affordability improved for third consecutive quarter: RBC
TORONTO, Feb. 25, 2013 /CNW/ - Quebec's housing affordability registered a
general improvement for the third consecutive quarter in the final quarter of
2012, according to the latest Housing Trends and Affordability Report,
released today by RBC Economics Research. RBC notes, however, that such
progress did little to stimulate homebuyer demand in the fourth quarter.
"While Quebec experienced strong housing demand early last year, resale
activity began to cool in the spring - a trend that continued through to the
end of the year," said Craig Wright, senior vice-president and chief
economist, RBC. "Even still, overall market conditions only slightly softened,
which helped to temper the rate of rising home prices rather than cause
With the exception of two-storey homes, the most recent affordability levels
match long-term averages in the province and suggest little in the way of
undue affordability-related strain on Quebec homebuyers.
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 in the province, fell in two of the three housing categories;
two-storey homes edged lower by 1.1 percentage points to 41 per cent and
detached bungalows by 0.3 percentage points to 32.8 per cent. The measure for
condominium apartments rose by 0.4 percentage points to 27.4 per cent.
Montreal-area affordability follows provincial trend and improves for third
Although the costs of owning a home still took a bigger bite out of household
budgets in Montreal than it has on average historically, homeownership became
more affordable for the third quarter in a row.
In the fourth quarter, RBC measures for Montreal declined in both two storey
homes and detached bungalows by 1.4 percentage points (to 50.4 per cent) and
0.9 percentage points (to 39.3 per cent), respectively. Condominium
apartments, however, rose marginally by 0.1 percentage points to 31.8 per cent.
"Slower momentum in home resales, which were down by more than 15 per cent in
the fourth quarter compared to the same period a year earlier, and downward
pressure on prices helped to make the Montreal-area market modestly more
affordable in the fourth quarter," explained Wright. "While some small price
declines are possible in the near term, reasonably balanced conditions between
buyers and sellers at this stage should help to limit their extent."
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.
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.
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
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.
affordability largely improves, tempering overall market
conditionsThe 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
-- 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 rbc.com/economics/market/.
Robert Hogue, Senior Economist, RBC Economics Research, 416 974-6192 Elyse
Lalonde, Manager, Communications, RBC Capital Markets, 416 842-5635
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