The overall trend in housing affordability in Canada continued to show a lack of direction in the third quarter of 2012. In the past two years or so, there have been alternating periods of improvement and erosion with regards to affordability, which, on net, left the general trend essentially flat on the basis of the national data. True to this pattern, housing affordability in the third quarter fully reversed two successive quarters of mild erosion in Canada, and returned (for the most part) to levels that prevailed at the end of 2011 – and were little changed relative to levels at the start of 2010. The improvement reflected modest declines in home prices and mortgage rates, as well as further house-hold income gains. At the national level, RBC’s housing affordability measures fell in all three categories in the third quarter of 2012 (a decline represents
an improvement in affordability). The detached bungalow benchmark eased by 1.0 percentage point to 42.0%, two-storey home by 1.2 percentage points to 47.8% and condominium apartment by 0.6 percentage points to 28.0%.
an improvement in affordability). The detached bungalow benchmark eased by 1.0 percentage point to 42.0%, two-storey home by 1.2 percentage points to 47.8% and condominium apartment by 0.6 percentage points to 28.0%.
Quebec – Second straight affordability improvement
Housing affordability improved for the second straight quarter in Quebec in the third quarter of 2012. The RBC measures edged lower across all housing types – by between 0.6 percentage points and 0.8 percentage points – to the levels that prevailed late in 2011 in the province. For the most part, these levels are just slightly worse than they have been on average historically, thereby indicating that prospective homebuyers in Quebec would feel mini-mally stretched, budget-wise, if they bought a home at current market prices.
Owning a two-storey home might impose greater than usual strain, however.
As was the case in many other provinces, home resale activity softened in Quebec in the second and third quarters of this year, which dampened up-ward pressure on prices. Market conditions, while loosening somewhat re-cently, remained generally within balanced territory