CALGARY — The Calgary-area housing market remains one of the most affordable in Canada, according to a report released today by RBC Economics Research.
The latest Housing Trends and Affordability Report said the local market has enjoyed the best of all worlds recently: stronger home resales and home building, moderately rising prices, and attractive and improving affordability.
“Such a combination is a rare feat, but it follows years of sluggish performance in the aftermath of the area’s mid-2000s boom,” said the report. “In the second quarter of 2012, a sharp drop in the costs of utilities provided unusual help to affordability in the area. Utilities and property taxes—two small components of home ownership costs—typically do not sway affordability, but the sudden reversal of earlier electricity rate increases led to a substantial 17 per cent quarterly decline in utilities, which was more than enough to move the affordability needle.”
In the second quarter, the RBC measures edged lower for condominium apartments and two-storey homes by 0.6 percentage points and 0.4 percentage points, respectively, while the measure for detached bungalows was unchanged in Calgary.
“Such general amelioration kept housing affordability in check at some of the better levels among Canada’s largest cities,” said the report.
The RBC Housing Affordability Measure, which has been compiled since 1985, shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities.
In the second quarter, RBC measures for Calgary edged lower for condominium apartments by 0.6 percentage points to 21.6 per cent and for two-storey homes by 0.4 percentage points to 37.2 per cent. The measure for detached bungalows remained unchanged at 36.7 per cent.
RBC said significant drops in the prices for electricity and natural gas in the second quarter of 2012 in Alberta “further solidified this province’s position as the market with the lowest home ownership costs as a share of household income in Canada.”
The RBC measures eased by 0.6 percentage points for both two-storey homes and condominium apartments, while the measure for detached bungalows edged lower by 0.3 percentage points, it said.
“Alberta experienced a 17 per cent decline in utility costs, which was the largest contributor to across-the-board improvements in housing affordability in the most recent quarter,” said Robert Hogue, senior economist, RBC. “Attractive affordability and a vibrant provincial economy are providing powerful incentives for Alberta homebuyers – second quarter home resales were at the best level in five years, surging 18 per cent over the same period last year.”
The affordablity measures in Alberta were: 32.0 per cent for detached bungalows; 34.8 per cent for two-storey homes; and 19.7 per cent for condominiums.
In Canada, they were: 43.4 per cent for bungalows, up 0.2 per cent; 49.4 per cent for two-storeys, up 0.6 per cent; and 28.8 per cent for condominiums, unchanged.