Province
TORONTO — Housing affordability improved in the third quarter, thanks to faster income growth and slower home price increases, Royal Bank’s RBC Economics division says in its latest housing report.
“Even with interest rates going up, housing markets will remain healthy going into 2006,” Derek Holt, assistant chief economist, said.
Housing markets across most of Canada are cooling gradually as the pace of price increases slowed. Alberta, Saskatchewan, Manitoba and parts of Atlantic Canada were the exceptions.
The RBC Affordability Index, which measures the proportion of pre-tax household income needed to service the costs of owning a home, stands at 24.6 per cent for a standard condo, which remains the most affordable housing type.
A standard townhouse is next at 28.8 per cent, followed by a detached bungalow at 35.5 per cent. A standard two-storey home remains the least affordable with an index reading of 41.3 per cent.
An index of 50 per cent would mean that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income.
According to the RBC report, condominiums remain the most affordable housing option across all markets.
RBC’s Affordability Index for a detached bungalow in Vancouver is 53.6 per cent, in Toronto 41.5 per cent, in Montreal 33.5 per cent and in Calgary 33 per cent.
© The Vancouver Province 2005