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Manitoba's housing affordability worsens:
RBC EconomicsCondos remain the best option for home buyers
TORONTO, May 18, 2006 — Manitoba's
housing affordability declined for a third consecutive quarter,
according to the latest Housing Affordability Index released
today by RBC Economics.
"The two-storey home and condo sectors saw the strongest
decline in affordability this quarter," said Derek Holt,
assistant chief economist, RBC. "Solid house price increases
and higher mortgage rates account for Manitoba's overall deterioration
in housing affordability."
The RBC Affordability Index, which measures the proportion
of pre-tax household income needed to service the costs of
owning a home, deteriorated for all housing types in Manitoba
with a detached bungalow reaching 33.5 per cent. A standard
two-storey home moved to 34.5 per cent, a standard townhouse
to 19.6 per cent and a standard condo to 18.8 per cent.
RBC noted that year-over-year price growth for a detached
bungalow remained steady at 12 per cent. However, compared
to the previous year, two-storey, townhouse and condo housing
classes also had first quarter price surges, jumping 21.9
per cent for a two-storey, 17.8 per cent for a townhouse and
24.2 per cent for a condo. Even with the across the board
deterioration in affordability, condos still remain the most
affordable option, requiring about 19 per cent of average
pre-tax income to cover costs.
RBC's Affordability Index for a detached bungalow for Canada's
largest cities is as follows: Vancouver 64.4 per cent, Toronto
41.7 per cent, Calgary 32.7 per cent, Montreal 34.9 per cent
and Ottawa 28.9 per cent.
Also included in the report are housing affordability conditions
for a broader sampling of smaller cities across the country.
For these smaller cities, RBC has used a narrower measure
of housing affordability that only takes mortgage payments
relative to income into account.
The Housing Affordability Index, which RBC has compiled since
1985, is based on the costs of owning a detached bungalow,
a reasonable property benchmark for the housing market. Alternative
housing types are also presented including a standard two-storey
home, a standard townhouse and a standard condo. The higher
the index, the more costly it is to afford a home. For example,
an Affordability Index of 50 per cent means that homeownership
costs, including mortgage payments, utilities and property
taxes, take up 50 per cent of a typical household's monthly
pre-tax income.
Highlights from across Canada:
- British Columbia: British Columbia's affordability
further deteriorated and remained the least affordable province
in which to own a home. Despite eroding affordability, B.C.'s
economy continues to exhibit strength.
- Alberta: The cost of owning a home in Alberta continued
to increase, as rapidly rising house prices and mortgage
rates outpaced strong income and employment growth for the
second consecutive quarter.
- Saskatchewan: Saskatchewan's affordability declined
across all housing classes for a second consecutive quarter.
Higher utility costs and rising mortgage rates led to the
deterioration, despite decent income growth.
- Ontario: While Ontario's housing market continues
to see signs of a soft landing, housing affordability declined.
Income gains of about $50 per month this quarter were not
enough to offset higher mortgage rates and higher utility
costs.
- Quebec: Affordability continued to deteriorate
for a second consecutive quarter. The sales-to-listings
ratio has been on a gradual decline over the past year implying
that our widely anticipated cooling of Quebec's housing
market is now underway.
- Atlantic region: Atlantic Canada continues to experience
a slow and steady deterioration in housing affordability.
Moderate wage gains in the region were not able to offset
the higher monthly payments necessary to maintain a house.
The full RBC Housing Affordability Index report is available
online, as of
8 a.m. E D.T. today at www.rbc.com/economics/market/pdf/house.pdf.
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For more information, please contact:
Derek Holt, RBC Economics, 416-974-6192
Jackie Braden, RBC Media Relations, 416-974-2124
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