Saskatchewan housing market becomes more affordable: RBC Economics

• Press Release
• Source: RBC
• On 5:00 am EDT, Wednesday September 9, 2009

TORONTO, Sept. 9 /CNW/ - Housing affordability has improved considerably in Saskatchewan since early last year with the RBC Affordability measures improving once more in the second quarter between 0.4 and 1.4 percent, according to the latest housing report released today by RBC Economics.

"Affordability measures have retreated since their peaks early last year and homebuyers have been taking the plunge, helping resales to rebound by more than 50 per cent since March," noted Robert Hogue, senior economist, RBC. "If this pace is sustained, property prices can be expected to heat up as well."

RBC's Housing Affordability measure for Saskatchewan, which captures the proportion of pre-tax household income needed to service the costs of owning a home, improved across all four classes in the second quarter of this year. Affordability of the benchmark detached bungalow in the province moved down to 40.5 per cent, the standard townhouse down to 32.6 per cent, the standard condo down to 25.9 per cent and the standard two-storey home down to 42.8 cent, all of which are above long-term averages.

RBC's Affordability measure for a detached bungalow for Canada's largest cities is as follows: Vancouver 63.4 per cent, Toronto 46.5 per cent, Ottawa 38.6 per cent, Montreal 37.3 per cent and Calgary 35.7 per cent.

The property benchmark for the Housing Affordability measure, which RBC has compiled since 1985, is based on the costs of owning a detached bungalow. Alternative housing types are also presented, including a standard two-storey home, a standard townhouse and a standard condominium. The higher the reading, the more costly it is to afford a home. For example, an Affordability reading 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: In the second quarter, housing affordability in
	        B.C. eased once again, further extending the downward trend since the
	        start of 2008, although homeownership costs are still significantly
	        above long-term levels. Sales of existing homes surged by more than
	        125 per cent from their cyclical trough early this year. Market
	        conditions have tightened and there has been some firming of prices.

	    -   Alberta: The biggest cumulative drop in the history of RBC
	        Affordability measures in Alberta deepened further in the second
	        quarter, falling to levels not seen since before the housing boom.
	        Existing home sales soared by more than 60 per cent between April and
	        July, fully reversing last year's slide. Tightening market conditions
	        should set the stage for some property value appreciation in the near
	        future.

	    -   Manitoba: The notable easing of homeownership costs in the past year
	        has fully repaired affordability in Manitoba, compared to historical
	        averages. Resale activity ramped up during spring and summer and
	        property prices generally maintained their steady upward trend,
	        supported by relatively tight market conditions.

	    -   Ontario: Solid improvements in affordability in Ontario have
	        supported a strong upturn in the market in recent months. All
	        Affordability measures are now below historic averages, indicating
	        that homeownership costs are at attractive levels in the province.
	        The general tone of the market is generally positive, but local
	        demand continues to be held back by the tough economic prospects many
	        communities in Ontario continue to face.

	    -   Quebec: Housing affordability improved once again in the second
	        quarter in Quebec, prolonging a trend that has been ongoing during
	        the past year. Sales of existing homes surged by more than 40 per
	        cent over the cyclical low reached mid-winter. With a more upbeat
	        market sentiment and tightening demand-supply conditions pushing
	        property values upward, the Quebec housing market appears to be back
	        on track.

	    -   Atlantic Canada: Rebounding from a relatively restrained downturn,
	        housing affordability in Atlantic Canada continues to improve, albeit
	        at a more moderate pace than elsewhere in the country. Affordability
	        measures have declined noticeably since early last year and now stand
	        below long-term averages. Sales of existing homes climbed by more
	        than 18 per cent since January and property values increased
	        modestly. Overall, Atlantic Canada is enjoying relatively attractive
	        affordability levels, which should support housing activity in the
	        period ahead.
	    

The full RBC Housing Affordability report is available online, as of 8 a.m. EDT today at www.rbc.com/economics/market/pdf/house.pdf.

For further information

Robert Hogue, RBC Economics Research, (416) 974-6192
Matt Gierasimczuk, Media Relations, RBC, (416) 974-2124

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