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Manitoba's housing affordability shows signs of improving:
RBC Economics
TORONTO, December 20, 2006 — For the third quarter
of 2006, Manitoba saw the strongest overall improvement in
affordability in the country for three out of four housing
classes, according to the latest Housing Affordability Index
released today by RBC Economics.
"The cost of owning a two-storey home saw the strongest
improvement in the country and now absorbs 34.8 per cent of
household income," said Derek Holt, assistant chief economist,
RBC. "Manitoba remains the most affordable province for
townhouses and condos even though the townhouse sector witnessed
a marginal deterioration."
The RBC Affordability Index for Manitoba, which measures
the proportion of pre-tax household income needed to service
the costs of owning a home, saw a slight improvement for all
housing types, with a detached bungalow remaining at 33.8
per cent. A standard two-storey home moved to 34.8 per cent,
a standard townhouse to 20.6 per cent and a standard condo
to 18.8 per cent.
A decline in property taxes and utility bills helped provide
some relief to homeowners, noted the report. Those declines
are working in Manitoba's favour to improve affordability
conditions for potential new home buyers. However, while price
growth appears to be cooling off, annual price growth for
two-storey, townhouse and condo classes still resides in the
15 to 20 per cent range.
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.
The report also looked 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.
RBC's Affordability Index for a detached bungalow in Canada's
other largest cities is as follows: Vancouver 70.1 per cent,
Toronto 43.8 per cent, Calgary 40.9 per cent, Edmonton 33.4
per cent, Montreal 36 per cent and Ottawa 30.8 per cent.
Highlights from across Canada:
- British Columbia: Housing affordability deteriorated
for a fourth consecutive quarter across all four types of
homes driven by a small decline in average monthly incomes,
higher utility bills, and climbing house prices.
- Alberta: The third quarter marked the sharpest
broad-based quarterly deterioration in Alberta's affordability
since 1990 with erosion of 12 to 15 per cent for all home
segments. Commodity-related spin-off effects have created
ample job opportunities, driven wages up and pushed unemployment
to record lows, helping to fuel the residential housing
market. However, the market is shifting away from excess
demand and towards cooling price pressures.
- Saskatchewan: An increase in house prices, combined
with a slight decline in household income this past quarter,
led to a marginal deterioration in affordability. However,
if rates continue to remain stable and price growth levels
off, affordability is expected to improve across all sectors
in 2007.
- Ontario: Dropping off from the growth peaks in
house prices and incomes seen several quarters ago, Ontario's
housing market has now cooled to more moderate levels. This
cooling has been slow and steady, and should allow for homeowners
to retain the bulk of their home equity gains going forward
into 2007 and 2008.
- Quebec: Housing affordability erosion was less
severe this quarter as income gains and utility relief managed
to outpace house price growth. The level of sales is expected
to continue to cool, while new home listings are expected
to increase and price growth to slow to a gradual pace across
the market.
- Atlantic region: Affordability remained relatively
unchanged thanks to house price growth leveling off and
cooling household income gains. Following the trend taking
place in other parts of the country, the pressures on Atlantic
Canada's housing market showed signs of balancing for the
second half of 2006.
The full RBC Housing Affordability Index report is available
online, as of
8 a.m. E.S.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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