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Housing affordability in Saskatchewan continues
to decline, says RBC Economics
Remains one of the best housing options in Canada
TORONTO, May 18, 2006 — Housing
affordability in Saskatchewan declined across all housing
classes for a second consecutive quarter, but the province
remains one of the best housing options in Canada, according
to a new report from RBC Economics.
"Saskatchewan has managed to avoid the wild swings in
affordability that other provinces have experienced,"
said Derek Holt, assistant chief economist, RBC. "Unlike
its neighbour Alberta, the pace of house price growth has
remained fairly steady, at about seven per cent year-over-year,
for all classes across the province."
The RBC Affordability Index, which measures the proportion
of pre-tax household income needed to service the costs of
owning a home, eroded slightly in Saskatchewan across all
four housing classes to 29.3 per cent for a detached bungalow,
32.2 per cent for a standard two-storey home, 23.3 per cent
for a standard townhouse and 19 per cent for a standard condo.
Higher utility costs and rising mortgage rates led to the
deterioration, despite decent average income growth of about
$49 per month. The good news is that housing starts were up
36 per cent compared to a year ago, while residential sales
also continued to gain momentum for the first quarter of 2006.
With such mild deterioration, Saskatchewan continues to be
one of the most cost-effective provinces to purchase a home,
noted the report.
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.
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.
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.
- Manitoba: Solid housing price increases and higher
mortgage rates were to blame for the overall deterioration
in Manitoba's housing market with affordability declining
for a third consecutive quarter.
- 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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