Housing affordability in Atlantic Canada remains the envy of the country's home buyers: RBC Economics

Housing affordability in Atlantic Canada remains the envy of the country's 
home buyers: RBC Economics 
TORONTO, Feb. 25, 2013 /CNW/ - Atlantic Canada's long-standing status as an 
affordable housing market received another boost in the fourth quarter of 
2012, according to the latest Housing Trends and Affordability Report issued 
today by RBC Economics Research. 
"Affordability levels in Atlantic Canada improved yet again in the last 
quarter of 2012, with measures for two-storey homes and detached bungalows 
dropping again and hitting levels that are at, or slightly below their 
long-term averages and well below the national averages," said Craig Wright, 
senior vice-president and chief economist, RBC. "Condos across the region 
became slightly more difficult to own for a typical household budget in the 
fourth quarter; however, this comes on the heels of a notable improvement in 
affordability around the mid year mark." 
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, were slightly lower in two out of three housing types (a decrease in 
the measure represents an improvement in affordability). 
The RBC measure for the benchmark detached bungalow fell by 0.5 percentage 
points to 31.9 per cent and the standard two-storey home by 1.0 percentage 
points to 36.3 per cent. The measure for condominium apartments rose by 0.3 
percentage points to 26.4 per cent. 
"Even with little to no affordability-related tensions across the region, 
there was a pull back in fourth quarter home resales, cumulating in a 13 per 
cent drop since the start of 2012," added Wright. "This dip in activity, 
coupled with a steady rise in the number of homes newly listed for sale in 
2012, resulted in considerably softer market conditions in Atlantic Canada." 
Fourth quarter home resales fell in the majority of local markets, including: 
Halifax, Moncton, Fredericton and Saint John. Markets such as Fredericton and 
Saint John in particular now favour buyers. 
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.
    --  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).

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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ST: Ontario

-0- Feb/25/2013 10:00 GMT

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