Quebec housing market bucks the national trend in the second quarter of 2013 as affordability improves: RBC Economics

Quebec housing market bucks the national trend in the second quarter of 2013 
as affordability improves: RBC Economics 
TORONTO, Aug. 27, 2013 /CNW/ - Quebec's housing market enjoyed broad-based 
improvement in affordability in the second quarter, bucking the deteriorating 
trend seen across the country, according to the latest Housing Trends and 
Affordability Report issued today by RBC Economics Research. Despite this 
improvement in affordability, home resales rose by a relatively subdued rate 
of 3.7 per cent - almost half the pace of the national level. 
"Although Quebec resales bounced back from the four-year lows reached earlier 
this year, they didn't mirror the same vigorous activity we saw in other parts 
of the country in the spring and summer," said Craig Wright, senior 
vice-president and chief economist, RBC."A lacklustre labour market and 
uncertain economic prospects in the province may be weighing on homebuyer 
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 in the province fell for two of the three housing categories 
tracked in the second quarter of 2013 (a fall in the measure indicates 
improvement in affordability). 
Affordability measures for Quebec fell for bungalows and condominiums; down 
0.5 percentage points to 33.5 per cent and 0.4 percentage points to 26.5 per 
cent, respectively. RBC's measure for two-storey homes remained unchanged at 
42.5 per cent. RBC notes that affordability levels are largely in line with 
historical norms in Quebec, which suggests that owning a home at market values 
shouldn't exert any undue stress on homebuyers at this point. 
Montreal-area housing activity lagging behind other major markets 
Although home resales in Montreal rose in the second quarter of 2013, the 
level of activity remained nearly 14 per cent below the 10-year average in the 
"It seems that many potential homebuyers in the area are still hesitant to 
enter the market - this could be linked to the fact that the unemployment rate 
rose above eight per cent this spring and Montrealers may be concerned about 
their job situations," explained Wright. 
The RBC report indicates that any affordability tensions are mostly isolated 
to the two-storey home segment of the market, where the measure stands 
significantly above its long-run average. This is not the case for the 
measures in other categories, which remain only slight above historical norms, 
RBC says. 
Second quarter RBC affordability measures fell modestly across all housing 
types in the Montreal area. Measures eased 0.5 percentage points for both 
condominiums and two-storey homes to 30.4 per cent and 49.9 per cent, 
respectively, while the measure for bungalows fell 0.7 percentage points to 
38.1 per cent. 
RBC's housing affordability measure for the benchmark detached bungalow in 
Canada's largest cities is as follows: Vancouver 82.1 per cent (up 2.2 
percentage points from the previous quarter); Toronto 54.5 per cent (up 0.5 
percentage points); Montreal 38.1 (down 0.7 percentage points); Ottawa 37.1 
(up 0.5 percentage points); Edmonton 34.0 (up 1.8 percentage points); Calgary 
33.0 (unchanged). 
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: 

        affordability takes one step back

Homeownership of single-family homes in the province became less affordable in 
the second quarter of 2013 amid a surge in resale activity since early spring 
following a near two-year long cooling stretch. RBC measures rose by 1.1 
percentage points for bungalows, by 0.8 percentage points for two-storey 
homes, and by only 0.1 percentage points for condominiums.
    --  Alberta:
        homeownership remains relatively affordable

Owning a home in Alberta continued to be relatively affordable for provincial 
homebuyers despite some increases in ownership costs in the past two quarters. 
RBC's affordability measures for the province rose between 0.1 and 0.7 
percentage points across all housing types in the second quarter; yet, levels 
still stood below their long-term averages.
    --  Saskatchewan:
        seesaw affordability pattern endures

Affordability in the province continued to experience a seesaw-like pattern 
which has characterized this market in recent years. RBC measures rose 
modestly by 0.9 percentage points for bungalow and 0.5 percentage points for 
two-storey homes in the latest period, while the measure for condominiums 
inched lower by 0.3 percentage points.
    --  Manitoba:
        housing affordability a mixed bag

The province's second quarter housing affordability developments proved to be 
a mixed bag with RBC's measure for the two-storey home category rising by 1.8 
percentage points, the measure for bungalows down slightly by 0.2 percentage 
points, and the measure for condominiums edging up by 0.2 percentage points.
    --  Ontario:
        steady as she goes

There was little change in housing affordability in Ontario in the second 
quarter. RBC's measures for both bungalows and two-storey homes rose by 0.2 
percentage points relative to the first quarter, while the measure for 
condominiums remained flat.
    --  Atlantic Canada:
        affordability stuck in neutral

Atlantic Canada's housing affordability levels remained relatively static at 
neutral levels in the second quarter of 2013. Affordability measures moved 
marginally in all categories tracked by RBC: bungalows and condominiums edged 
lower by 0.1 percentage points and 0.2 percentage points, respectively; 
two-storey homes edged up by 0.1 percentage points.

The full RBC Housing Trends and Affordability report is available online, as 
of 8 a.m. ET today, at

Craig Wright, Senior Vice-President and Chief Economist, RBC, 416 974-7457 
Robert Hogue, Senior Economist, RBC, 416 974-6192 Elyse Lalonde, Manager, 
Communications, RBC Capital Markets, 416 842-5635


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