Saskatchewan's housing affordability broadly improved in the third quarter of 2011, according to the latest Housing Trends and Affordability Report issued by RBC Economics. This reverses part of the deterioration in affordability earlier in the year.
"Fuelled by strong economic growth in Saskatchewan, home resales rose nearly six per cent from the second quarter to their highest level in two years," said Robert Hogue, senior economist, RBC. "Affordability was clearly not a deterrent for Saskatchewan homebuyers. Strong housing market gains were registered in Saskatoon and, to a lesser extent, Regina."
Although homeownership costs continue to be historically high in Saskatchewan, they declined across all housing types in the third quarter. Home prices in the province maintained their steady ascent, with modest appreciation for most housing types.
The RBC housing affordability measures for Saskatchewan, which capture the province's proportion of pre-tax household income needed to service the costs of owning a home, decreased across all housing types in the third quarter of 2011 (a decrease represents a gain in affordability). The measure for the benchmark detached bungalow in the province fell to 38.9 per cent (a decrease of 0.8 percentage points from the previous quarter), the standard condominium to 26.3 per cent (down 0.8 percentage points) and the standard two-storey home to 42.0 per cent (down 0.9 percentage points). This reverses some of the increases seen in the previous quarter.
"Looking ahead to next year, Saskatchewan's strong economic growth will continue to support the province's housing market," added Hogue.
RBC's housing affordability measure for the benchmark detached bungalow in Canada's largest cities is as follows: Vancouver 90.6 per cent (down 1.5 percentage points from the previous quarter), Toronto 52.1 per cent (up 0.1 percentage points), Montreal 40.9 per cent (down 1.3 percentage points), Ottawa 40.8 per cent (down 0.6 percentage points), Calgary 37.6 per cent (up 0.5 percentage points) and Edmonton 33.2 per cent (down 0.6 percentage points).
The RBC housing affordability measure, which has been compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market in Canada. Alternative housing types are also presented including a standard two-storey home and a standard condominium. The higher the reading, the more costly it is to afford a home. For example, an affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.
