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.
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
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
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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