TORONTO, Feb. 25, 2014 /CNW/ - Housing affordability in Atlantic Canada
remained at generally neutral levels in the fourth quarter of 2013 and
continued to compare favourably with the majority of markets across
Canada, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.
Atlantic Canadians' pursuit of owning a home continued to be lacklustre
in the late stages of 2013 with resales dropping 3.1 per cent between
Q3 and Q4, and activity levels falling almost 10 per cent below the
10-year average.
"Demand for housing in Atlantic Canada is being undermined by a stagnant
labour market, fragile consumer confidence, and weak demographics in
many areas throughout the region," said Craig Wright, senior
vice-president and chief economist, RBC. "It is unlikely that sluggish
demand has anything to do with affordability issues, however, as our
affordability measures for the region largely improved in the last few
months of 2013."
The RBC housing affordability measures, which capture the proportion of
pre-tax household income needed to service the costs of owning a home
at market values, decreased for two of the three categories in the
fourth quarter of 2013 (a decline in the measure represents improvement
in affordability).
RBC measures fell by 0.6 percentage points to 36.0 per cent for
two-storey homes and by 0.1 percentage points to 31.6 per cent for
bungalows. The measure for condominiums rose by 0.2 percentage points
to 26.3 per cent.
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities in the fourth quarter of 2013 is as follows:
Vancouver 81.6 (down 2.3 percentage points from the previous quarter);
Toronto 55.6 (up 0.1 percentage points); Montreal 38.8 (unchanged);
Ottawa 36.7 (down 0.4 percentage points); Calgary 33.8 (down 0.2
percentage points); Edmonton 33.3 (up 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.
It is important to note that RBC's measure is designed to gauge
ownership costs associated with buying a home at present market values.
It is not a representation of the actual costs incurred by current
owners, the vast majority of whom have bought in the past at
significantly different values than those prevailing in the latest
period.
Highlights from across Canada:
-
Alberta's homes become even more affordable
Owning a home at market value in Alberta became slightly more affordable
for most housing categories in the final quarter of 2013 and continued
to compare favourably against historical and national averages. RBC's
measures fell by 0.5 percentage points for two-storey homes and by 0.2
percentage points for bungalows. The measure for condominiums edged
higher by 0.1 percentage points.
-
Saskatchewan's affordability trends sideways
Housing affordability in the province continued to play a predominantly
neutral role in home-buying decisions with levels standing close to
historical norms. RBC's affordability measures declined 1.1 percentage
points for two-storey homes and 0.2 percentage points for bungalows.
The measure for condominiums was up by 0.4 percentage points.
-
Manitoba's surge in listings lends a hand to affordability
A surge in newly listed homes for sale weakened demand-supply conditions
in Manitoba during the second half of 2013, which ultimately helped to
improve affordability with RBC measures for two-storey homes and
bungalows slipping by 1.1 percentage points and 0.6 percentage points,
respectively. The measure for condominiums rose by 0.8 percentage
points.
-
Ontario's affordability picture remains largely unchanged
RBC's affordability measures for Ontario eased by 0.1 percentage points
for both bungalows and two-storey homes and stayed flat for
condominiums in the fourth quarter of 2013. Owning a single-detached
home at market value in the province continues to take a larger share
of household income compared to the historical average despite marginal
improvements for the first time in a year.
-
Quebec's affordability conditions little changed from the third quarter
The only observable variation in affordability conditions in Quebec
during the fourth quarter was in the two-story homes category, with
RBC's measure inching higher by 0.2 percentage points. The measures for
bungalows and condominium apartments remained unchanged. All measures
continued to stand near their long-run averages.
The full RBC Housing Trends and Affordability report is available
online, as of 8 a.m. ET today, at rbc.com/economics/economic-reports/canadian-housing-forecast.html.
SOURCE RBC
