Home resale activity weakens slightly, slows upward pressure on prices
Montreal-area affordability remains relatively even-keeled
TORONTO, Nov. 22, 2012 /CNW/ - Quebec's housing affordability improved
in the third quarter of 2012 for the second consecutive quarter, and
returned to levels witnessed in late 2011, according to the latest Housing Trends and Affordability Report, released today by RBC Economics Research.
"Much like many of the other markets in Canada, home resale activity
softened in Quebec in the middle of this year, slowing upward pressure
on prices," explained Craig Wright, senior vice-president and chief
economist, RBC. "While we have seen some loosening in the Quebec market
recently, conditions generally remained balanced."
According to RBC, affordability levels in Quebec stand slightly above
the historical average, which indicates that the province's prospective
homebuyers may be feeling a slight pinch budget-wise if they bought a
home at the current market prices.
RBC's 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, edged lower across all housing types (a
decrease in the measure represents an improvement in affordability).
The RBC measure for the benchmark detached bungalow fell by 0.8
percentage points to 33 per cent, while the standard two-storey home
and condominium categories fell by 0.6 percentage points to 42 per cent
and 27 per cent, respectively.
Montreal-area market mirrors developments seen across Canada
"Developments in the Montreal-area housing market were very similar to
the most of Canada's major cities in the third quarter," said Wright.
"Affordability levels in the city remained slightly stretched, but
improved for the most part as home resales slowed, prices moderated,
and as market conditions loosened but stayed largely balanced."
RBC notes that the only exception to this improved affordability picture
has been a slight deterioration in the measure for detached bungalows,
which inched higher by 0.1 percentage points in the third quarter in
Montreal. The measures for two-storey homes and condominium apartments
fell by 0.5 percentage points to 51.7 per cent and 31.7 per cent,
Since 2007, two-storey homes have been less affordable than they were
historically, putting some stress on the area and pushing measures
above both the long-term and historical averages. Still, RBC indicates
that there has been little evidence of undue affordability stress
outside of this market segment.
Where housing affordability stands in Canada
RBC's housing affordability measure for the benchmark detached bungalow
in Canada's largest cities is as follows: Vancouver 83.2 per cent (down
5.8 percentage points from the previous quarter); Toronto 52.4 per cent
(down 0.7 percentage points); Montreal 40.2 per cent (up 0.1 percentage
points); Ottawa 38.7 per cent (down 0.4 percentage points); Calgary
38.3 per cent (down 0.7 percentage points) and Edmonton 31.1 per cent
(down 0.6 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: Affordability hurdles still tough to clear
British Columbia's housing market experienced improvements in the third
quarter of 2012, and yet, affordability conditions remained the poorest
across Canada. RBC measures fell between 2.0 percentage points and 3.7
percentage points, the largest drops across Canada. The situation
remains less severe elsewhere in the province; the share of income
needed to carry ownership costs in Victoria, for instance, is almost
half the share in Vancouver for some housing types.
Alberta: Attractive affordability contributes to market renaissance
Alberta's housing market enjoyed firm and steady resale activity,
balanced demand-supply conditions, moderate home price increases, and
improved housing affordability. Third quarter affordability measures
for the province edged lower - between 0.2 percentage points and 0.4
percentage points -remaining below their long-term and the national
Saskatchewan: Little evidence of affordability strain
Significant deteriorations in housing affordability in the second
quarter in Saskatchewan were largely reversed in the third with RBC
measures in the province falling between 0.9 percentage points and 1.3
percentage points. The measures stood just slightly above their long
term averages for all housing categories, indicating little in the way
of undue affordability induced strain on the market.
Manitoba - Market losing some of its steam; minimal pressure on affordability
Declining housing prices spurred a notable improvement in housing
affordability in Manitoba over the third quarter. RBC measures fell
between 0.6 percentage points and 1.6 percentage points, which fully
unwound the deterioration that occurred in the prior quarter.
Provincial affordability levels sit slightly higher than their averages
since the mid 1980s, but remain well below the corresponding national
Ontario: More balanced conditions help to ease affordability stress
Ontario's housing affordability eased somewhat in the third quarter, but
remains under mild pressure, most notably in the two-storey home
segment. RBC measures declined between 0.5 percentage points and 1.1
percentage points in the province, which, in effect, rolled back the
two consecutive quarterly increases that took place in the first half
of this year.
Atlantic: Affordability position remaining quite stable
Housing affordability in Atlantic Canada improved slightly across the
board, with RBC measures in the region inching lower by 0.2 percentage
points to 0.7 percentage points relative to the previous quarter.
Affordability measures have been reasonably stable over the past three
years in the region, showing no discernable trends on either the up or
The full RBC Housing Trends and Affordability report is available
online, as of 7 a.m. ET today, at rbc.com/economics/market/.