Alberta’s housing market is showing increasing signs of strength, due to impressive employment gains and a strong provincial economy so far this year, and remains the most affordable province in the country, says the latest Housing Trends and Affordability Report released Friday by RBC Economics.
“In the third quarter, provincial home resales and housing starts picked up some steam, reaching their highest levels in more than a year,” said Robert Hogue, a senior economist with RBC. “This renewed demand for Alberta’s housing was partly a result of being an easily affordable market – in fact, the most affordable in Canada.”
RBC’s housing affordability measures for Alberta – which capture the province’s proportion of pre-tax household income needed to service the costs of owning a home at market values – have remained the lowest among the provinces, said the report.
For a detached bungalow, the measure was 32.8 per cent in Alberta, down 0.8 per cent from a year ago. A standard two-storey saw its affordability measure fall year-over-year by 0.8 per cent to 36.0 per cent and a standard condominium also fell by 0.1 per cent from a year ago to 21.3 per cent.
For Calgary, the affordability measures and year-over-year change were: bungalow, 37.6 per cent (— 0.4 per cent); two storey, 38.2 per cent (— 0.7 per cent); and condo, 23.2 per cent (— 0.1 per cent).
At the national level, the affordability measures and year-over-year change were: bungalow, 42.7 per cent (1.1 per cent); two storey, 48.8 per cent (1.1 per cent); and condo, 29.0 per cent (0.4 per cent).
“Going forward, we expect that positive underlying fundamentals will continue to underpin home resale activity in the province,” said Hogue.
“Despite some slight deterioration in affordability, Calgary continues to be one of the most affordable major cities in the country.”
The RBC Housing Affordability Measure has been compiled since 1985. The higher the reading, the more costly it is to afford a home based on going market values. For example, an affordability reading of 50 per cent means that home ownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income.
“The good news is that the Calgary market regained some momentum in the third quarter after somewhat of a lull in the second quarter,” said the report. “Both home resales and prices picked up again for most housing categories in the area. The Calgary market has been invigorated by strengthening local employment where more than 25,000 net new jobs (a 3.7 per cent increase) have been created so far this year.
“The flip side of renewed momentum, however, has been an erosion of affordability.” Compared to the previous quarter, the affordability measure for a detached bungalow in Calgary has risen by 0.5 per cent and by 0.2 per cent for a condo. It has dropped by 0.3 per cent for a two-storey home.
According to the Calgary Real Estate Board, year-to-date until the end of October, single-family MLS sales have increased by 9.89 per cent compared with the same period last year to 11,503 transactions and the average price is up 0.49 per cent to $468,844.
In the condo market, sales are up by 2.92 per cent to 4,681 transactions while the average sale price has dipped by 0.69 per cent to $288,736.
© Copyright (c) The Calgary Herald