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Manitoba's housing affordability deteriorating, but at a
slower pace: RBC Economics
Supply of homes increasing as market conditions moderate
TORONTO, September 19, 2006 — Manitoba's housing affordability
continued to deteriorate for a fourth consecutive quarter,
according to the latest Housing Affordability Index released
today by RBC Economics.
"This quarter's deterioration in affordability was
less pronounced compared to the previous quarter. Manitoba's
two-storey homes witnessed the sharpest deterioration as prices
shot up 21 per cent compared to last year," said Derek
Holt, assistant chief economist, RBC. "Condos remain
the best option for prospective home buyers as prices declined
from the previous quarter."
The RBC Affordability Index for Manitoba, which measures
the proportion of pre-tax household income needed to service
the costs of owning a home, worsened slightly for all housing
types. A detached bungalow now requires 34.2 per cent of pre-tax
household income. A standard two-story home moved to 35.5
per cent, a standard townhouse to 20.1 per cent and a standard
condo to 19.1 per cent.
While the market remained tilted in favour of home sellers,
for the first time since the start of the year, growth in
new listings overtook sales. For Manitoba, the increased supply
of homes, combined with higher mortgage rates and slower wage
growth, should prompt softer overall housing market conditions
for 2007.
Also included in the report is a look at mortgage carrying
costs relative to incomes for a broader sampling of smaller
cities across the country, including Winnipeg. 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, the most comprehensive,
multiple housing class report, 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 68.2 per cent, Toronto
43.9 per cent, Montreal 36 per cent, Calgary 34.6 per cent
and Ottawa 30.3 per cent.
Highlights from across Canada:
- British Columbia: Housing affordability continued
to erode in every housing segment. Bungalow and townhome
markets are setting new records while condos and standard
two storey homes lie close to 1990 records. Surging prices
and rising interest rates are to blame, despite healthy
income growth of 4.6 per cent compared to a year ago.
- Alberta: Alberta experienced one of the sharpest
deteriorations in housing affordability across the country
last quarter. While incomes are growing at a fairly rapid
five per cent annual pace, house price growth is multiples
faster.
- Saskatchewan: For a third consecutive quarter,
Saskatchewan's housing affordability deteriorated in every
housing class. Solid wage gains, coupled with fairly average
house price growth, have helped keep housing conditions
affordable. Saskatchewan remains one of the most affordable
provinces.
- Ontario: Despite weakening price gains in Ontario's
housing market, affordability deteriorated for a third straight
quarter. The growth of household income failed to keep pace
with higher mortgage rates and rising utilities costs.
- Quebec: Most of Quebec's housing market is in the
midst of an orderly slowdown as prices grow much slower
than the double-digit pace of earlier years. Three out of
four housing segments deteriorated in affordability this
quarter, with Quebec's condo market the exception.
- Atlantic region: Atlantic Canada's housing affordability
continued its downward descent for the fourth consecutive
quarter. Big jumps in house prices, higher mortgage rates
and a four per cent increase in utilities were among the
main forces behind the decline, with townhouses showing
the strongest deterioration of all.
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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