Local housing less affordable “ Back in 2006 the average price was substantially lower …”
Regina Leader Post - January 26, 2010
Regina’s housing market has gone from being the most affordable in Canada to moderately unaffordable in less than three years, according to the Frontier Centre for Public Policy.
The Queen City rated 3.5 on the centre’s affordability index, which falls within the ‘moderately unaffordable’ range of 3.1 to four. Regina’s rating remains unchanged from 2008 to 2009, said the report released Monday.
The centre’s affordability index is calculated by taking the median house price — the exact mid-point between the highest priced and lowest priced house sold in the third quarter — and dividing it by median annual gross income.
For example, in Vancouver, the median value of homes sold in the third quarter of 2009 was $549,000, while the median household income was $58,200 for a multiple of 9.3. In other words, it would take 9.3 years of income to pay for a typical home in Vancouver. Historically, the ratio was three years of salary, but in recent years that has increased dramatically.
In Regina, that ratio is 3.5 times annual income, but as recently as 2006 was only two times income, says David Seymour of the Frontier Centre’s Regina office.
“The Saskatchewan (housing affordability chart) is really interesting … In 2006, it was at 2.0, then in 2007 it was 2.6, then it went up to 3.5 (in 2008),’’ Seymour said.
In fact, two to three years ago, Regina was among the most affordable cities in the world. Today, Regina is on par with the average Canadian city as being moderately unaffordable.
Saskatoon, at 4.4, is considered “seriously unaffordable,’’ along with Calgary, Edmonton, Hamilton and Montreal. In 2008, Saskatoon was even more unaffordable at 4.6.
Seymour said the rising cost of Regina housing doesn’t seem to be related to the cost of materials or labour. He said restrictive zoning regulations could be restricting access to land for development, causing housing prices to rise.
But Gord Archibald, executive officer of the Association of Regina Realtors, said the main reason for the increase in housing prices is simple supply and demand.
“Back in 2006, the average price was substantially lower than it is now.” After two or three years of strong population and economic growth, housing prices have risen, reflecting increased demand, he said.
But Regina is still a relatively affordable place to buy a new or existing home, Archibald added.
“Outside of Winnipeg, Regina is the most affordable major market in Western Canada and is more affordable than most major markets across the country.”
Vancouver not only has the least affordable housing of the 28 markets measured in Canada, but of 272 metropolitan markets ranked in Ireland, the U.K., New Zealand, Australia, the U.S. and Canada, according to statistics compiled by the Winnipeg-based think-tank.
As Canada’s resale housing market boomed and prices rose in 2009, affordability fell, sending the national average to a reading of 3.7 from 3.5 the year before, placing Canada’s overall housing market in the “moderately unaffordable” category.
Toronto moved from a reading of 4.8 to 5.2, moving it into the severely unaffordable category, while Montreal moved from a reading of 4.6 to 4.9. Victoria was second only to Vancouver, with its reading rising from 7.4 to seven while Ottawa’s hot housing market remained within the realm of the moderately unaffordable, with a reading of 3.8, up from 3.4 the year before.
Affordability improved slightly in Calgary and Edmonton, the site of some of Canada’s hottest housing markets in recent years, falling to 4.6 from 4.8 in Calgary, and to 4.1 from 4.2 in Edmonton. They still, however, remained “seriously unaffordable.”