It’s becoming more affordable to own a home, according to the Royal Bank
of Canada, but the high cost of ownership will continue to keep the market steady and contain price increases.
In its quarterly housing affordability report, RBC said home ownership cost decreased over the summer for the first time in more than a year. This is attributed to low mortgage rates.
But homes were still more expensive than long-term averages in many markets, suggesting “greater than usual tensions exist for Canadian homebuyers.”
“These tensions are unlikely to derail demand for housing in the near term but will act as a restraint on growth in market activity going forward,” said RBC senior economist Robert Hogue.
This is the first time affordability has improved since mid-2009.
The following are provincial highlights from the report:
- British Columbia: In the third quarter of 2010, affordability in B.C. dropped between 1.8 and five per cent, representing the largest decline since the first quarter of 2009. But the measures remain above long-term averages and poor affordability will weigh down on provincial housing demand in the time ahead.
- Alberta: Homeownership in Alberta is among the most affordable in Canada both in absolute terms and relative to its historical averages.
- Saskatchewan: Current market conditions are stretching homebuyers’ budgets. However, those budgets are likely to be boosted from a strong expected rebound in the provincial economy and thus family income this year and next.
- Manitoba: Lower mortgage rates in the third quarter were particularly helpful in bringing down homeownership costs in the province although some price declines also contributed. Manitoba is one of only two provinces, alongside Alberta, where the measures for all housing types are currently below long-term averages, which will be a supportive factor for demand going forward.
- Ontario: Existing home sales ended their earlier slide by sustaining three straight gains from August to October. With the market now back in balance, the recent softness in home prices will likely prove to be healthy for 2011.
- Quebec: Following four consecutive increases, province affordability fell 1.4 to 1.8 per cent. Still, the measures remain close to the pre-downturn peaks and above their long-term average, which will restrain upcoming demand growth.
- Atlantic: Affordability levels returned to roughly where they were in mid- to late 2009. Overall, housing continues to be quite attractive in Atlantic Canada.