Alberta's housing market and affordability levels amongst the strongest in Canada: RBC Economics

Alberta's housing market and affordability levels amongst the strongest in 
Canada: RBC Economics 
TORONTO, Feb. 25, 2013 /CNW/ - Alberta's housing market remained vibrant in 
the final quarter of last year, buoyed by attractive affordability levels, 
accelerating population growth, a healthy labour market and a strong 
provincial economy, according to the latest Housing Trends and Affordability 
Report issued today by RBC Economics Research. 
The report indicates that although the pace of home resales slowed in closing 
months of 2012, the housing market tightened up as fewer properties were 
listed for sale. 
"While homes are not particularly cheap in the province, Albertans boast the 
highest household incomes in Canada, which helps ensure that the share of 
their budget taken up by homeownership costs is easily manageable," said Craig 
Wright, senior vice-president and chief economist, RBC. "Barring an unexpected 
shock to the economy, housing market conditions in Alberta should remain 
positive in 2013." 
The RBC housing affordability measures for the province, which capture the 
pre-tax household income needed to service the costs of owning a home at 
market values, fell across all three housing types tracked by RBC (a decrease 
in the measure represents an improvement in affordability). RBC's measures for 
the benchmark detached bungalow and the standard two-storey fell by 0.2 
percentage points to 32.1 per cent and 34.7 per cent, respectively. The 
measure for condominium apartments fell by 0.1 percentage points to 19.7 per 
cent. 
Calgary-area affordability supports market renaissance 
RBC notes that Calgary experienced a market renaissance in 2012, reaping the 
benefits of strong provincial GDP and in-migration, which propelled home 
resales in the area. 
"Calgary-area buyers enjoyed significantly lower homeownership costs as a 
share of income than they faced at the market peak in early 2007 and the bar 
fell even further in 2012," added Wright. "In fact, it is the only major city 
in Canada where RBC measures are lower than their historical averages, 
suggesting that Calgary is one of the more affordable markets in the country." 
Thanks to improvements in previous quarters, all RBC measures stood below 
their previous-year levels in the fourth quarter. There was some minor 
deterioration in the latest period, however, with the measure for detached 
bungalows rising by 0.2 percentage points. Still, the measure for two-storey 
homes remained flat, and that for condominium apartments fell by 0.1 
percentage points. 
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.
    --  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
        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 rbc.com/economics/market/.

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

SOURCE: RBC

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CO: RBC
ST: Ontario
NI: FIN ECOSURV ECO 

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


 
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