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Saskatchewan continues to be Canada's most affordable province
for housing, says RBC Economics
TORONTO, September 19, 2006 — Saskatchewan continued
to be one of the most affordable provinces for housing, despite
housing affordability deteriorating slightly in every class
for a third straight quarter, according to the latest RBC
Economics' Housing Affordability Index,
"Solid wage gains, coupled with fairly average house
price growth, have helped keep housing conditions affordable,"
said Derek Holt, assistant chief economist, RBC. "While
its neighbours to the west continue to feel the blistering
pace of rising house prices, Saskatchewan remains one of the
most affordable provinces, especially when purchasing a two-storey
home."
The RBC Affordability Index for Saskatchewan, which measures
the proportion of pre-tax household income needed to service
the costs of owning a home, eroded slightly across all four
housing classes to 30.5 per cent for a detached bungalow,
32.8 per cent for a standard two-storey home, 24.2 per cent
for a standard townhouse and 19.4 per cent for a standard
condo.
The report noted that house prices in Saskatchewan, which
jumped with double-digit growth in early 2005, have pulled
back to a more sustainable pace in 2006. Lower utility bills
helped offset the slight deterioration of affordability that
was driven by interest rate hikes.
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 Regina and Saskatoon.
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.
- Manitoba: Manitoba's two-storey houses saw the
sharpest deterioration in affordability, as prices were
up 21 per cent compared to last year. Detached bungalows
and condos remain the best options for prospective home
buyers as prices declined from the previous quarter.
- 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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