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,
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
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.
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.
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.
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.
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 rbc.com/economics/market/.
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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