TORONTO, Nov. 22, 2012 /CNW/ - Alberta's housing market enjoyed a strong
resurgence in activity thanks to an unusual mix of favourable factors
in the third quarter of this year, according to the latest Housing Trends and Affordability Report, issued today by RBC Economics Research.
RBC indicated that attractive and improving affordability, firm and
steady resales, balanced demand and supply and moderate price increases
in the province are a far cry from the prolonged market slump that
followed the mid-2000s boom.
"Underpinned by a vibrant provincial economy and strong population
growth, we expect that Alberta's recent housing renaissance is likely
still in its initial stages," said Craig Wright, senior vice-president
and chief economist, RBC. "Strong economic growth is forecast to
continue into 2013, which bodes well for further advances in the
provincial housing market next year."
RBC's housing affordability measures for Alberta, which capture the
province's proportion of pre-tax household income needed to service the
costs of owning a home at going market value, edged lower for all
housing categories (a decline in the measure represents increased
affordability). The measure for the benchmark detached bungalow fell by
0.3 percentage points to 32.7 per cent, the standard two-storey home by
0.4 percentage points to 35.4 percent and the condominium apartment by
0.2 percentage points to 20.1 per cent.
"Alberta's housing affordability continues to be in a great position.
With provincial measures standing below both historical averages and
national averages, it's quite an attractive regional picture," added
Calgary-area affordability at multi-year best
The Calgary-area market bucked the slowing trend in home resales seen in
other Canadian markets in the third quarter with steady activity
relative to the previous quarter. It also matched the broad-based
improving trend in housing affordability.
RBC measures eased between 0.2 and 0.7 percentage points in the Calgary
area to multi-year lows; early 2009 was the last time two-storey homes
had a measure this low and the measure for condominiums is at its
lowest level since late 2005.
"A significant pickup in resales during the first half of the year
considerably tightened Calgary's market conditions, which may
eventually lead to stronger upward pressure on home prices in the
city," stated Wright.
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.
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.
Quebec: Second straight affordability improvement
Housing affordability improved for the second straight quarter in
Quebec, with RBC's measures edging lower across all housing types in
the province, between 0.6 percentage points and 0.8 percentage points,
in the third quarter. For the most part, levels are only slightly worse
than the average historical level, indicating that prospective
homebuyers in Quebec may feel minimally stretched budget-wise, if they
bought a home at current market prices.
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/.