Housing affordability in Canada deteriorated for the third consecutive quarter and is likely to erode further over the next 12 to 18 months, despite changes in conditions which point to more balanced real estate markets, according to the RBC Housing Trends and Affordability study released today. Anticipated interest rate hikes are expected to increase the cost of ownership in the months ahead, even as the heat comes off of real estate markets, but RBCbelieves that job creation and income gains “should partially mitigate” the effect of rising rates and keep affordability levels below previous peaks.
Regionally, the greatest erosion in housing affordability occurred in Saskatchewan and Manitoba.
Owning a home in Saskatchewan took a bigger chunk of household budgets in the first quarter. This more than reversed a small decline in the last three months of 2009. RBC affordability measures rose between 0.9 and 1.6 percentage points, representing some of the stronger increases in the country (although trailing far behind British Columbia). After flattening or declining marginally in previous quarters, housing prices picked up notably in the province in the first few months of this year; however, with sales slowing and the number of homes available for sale growing more recently, further price increases are unlikely to be as hefty in the near term. Despite the deterioration in the first quarter, affordability measures remain well off the peak levels of early 2008 – which were also the all-time highs in Saskatchewan.
Read the full report here.
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