“Saskatchewan is the new Alberta…,” according to RBC’s quarterly Housing Affordability report released yesterday. The catchy subtitle goes on to ask the question, “but for how long?”
“Saskatchewan now holds the top spot on growth across all key housing indicators including housing starts, house prices, residential building permits, and re-sale activity… The major erosion of affordability that has occurred over the last year should gradually take a bite out of current momentum over the coming year.”
RBC measures the percentage of pre-tax income required to service mortgage debt on four popular types of housing. Here’s a quick look at how affordability has been impacted in our province between the fourth quarter of 2006 and the fourth quarter of 2007, the latest numbers this report examines.
Detached bungalows have gone from 31% of income to 40.4% of income.
Standard two-storeys have gone from 33.8% of income to 42.3% of income.
Standard townhouses have gone from 24.8% of income to 34.2% of income.
Standard condos have gone from 19.9% of income to 26.2% of income.
Lower housing prices in Calgary, measured against high increases in Saskatchewan have leveled the playing field between the two areas over the last year. You’ll now pay an equal portion of income to live in either Saskatchewan, or Calgary.
“Nationwide housing affordability deteriorated in every consecutive quarter throughout 2007 to end up at its most unaffordable level since the housing bubble peaked in 1990… Only Alberta bucked the trend in the latest quarter.”
RBC is predicting improved affordability across most markets in 2008, largely driven by “falling mortgage rates, cooler forecast house price gains and decent income growth.”
Read RBC’s Housing Affordability Report here.
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