Calgary is one of the few markets in Canada where affordability conditions look better than their historical norms, despite continued price growth, and it’s keeping housing in the city attractive relative to other major centres in the country, says a new report by RBC Economics Research.
The Housing Trends and Affordability Report, released on Tuesday, said homebuyer demand in Calgary continues to benefit from attractive affordability levels, a hot labour market, a fast-rising population and a booming provincial economy.
“This is not to say that home prices are cheap in the area – they are in fact the third-highest in the country after Vancouver and Toronto – it is instead a reflection of just how strong household incomes are in Calgary,” said Craig Wright, senior vice-president and chief economist for RBC.
The RBC affordability measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments, property taxes and utilities.
In the fourth quarter, RBC measures for Calgary eased by 0.3 percentage points to 34.2 per cent for two-storey homes and by 0.2 percentage points to 33.8 per cent for bungalows. The measure for condominium apartments inched slightly higher by 0.1 percentage points to 20.0 per cent.
“Calgary’s housing sector remains strong and stable as demonstrated by the steady and encouraging rate of price growth alongside the consistent market activity and buyer confidence we are currently seeing, comparable to what we experienced last year. While prices continue to increase, buyer’s confidence and enthusiasm has remained unwavering, as sales activity consistently climbs alongside the housing prices this year,” said Kaitlyn Gottlieb, a realtor with Century 21 Bamber Realty Ltd. in Calgary.
“The luxury market continues to have a considerable influence on the upward sales curve coupled with Calgary’s continued growth economically; the upswing in oil and gas prices; and our substantial inner-city development. With another strong year of forecasted net migration, we are seeing an influx of multi-family housing, as infills and four-plexes take the place of previous rental properties, helping to drive up prices through new development in established inner-city neighbourhoods.”
Gottlieb said Calgary remains an affluent city with a strong economy, attracting higher than expected net migration and enticing both local and foreign investors with attractive interest rates, limited rental availability and high economic growth which is driving both prices and activity upwards as the market moves into the busy spring season.
In Alberta, affordability measures declined by 0.5 percentage points to 34.6 per cent for two-storey homes and by 0.2 percentage points to 32.7 per cent for bungalows. The measure for condominium apartments edged slightly higher by 0.1 percentage points to 19.9 per cent.
“Affordability levels in Alberta continue to compare favourably against both historical averages in the province and nationally,” said the RBC report. “We expect that constructive affordability conditions, a booming provincial economy, and strong population growth will continue to fuel demand for housing in Alberta in the year ahead.”
Nationally, the affordability measures for both bungalows and two-storey homes edged lower by 0.2 percentage points to 43.1 per cent and 48.7 per cent respectively. The measure for standard condominiums fell 0.1 percentage points to 28.0 per cent.