A new report says recent price increases in the Manitoba housing market have not adversely affected affordability.
According to the RBC Economics report Housing Trends and Affordability, home affordability levels in Manitoba remain in line with long-term averages, even though provincial real estate activity picked up over the closing months of 2009.
The report indicated the measurements used to gauge affordability in Manitoba only “rose moderately.”
“Increased resale activity in the housing market has moved prices upward and caused affordability to slip in the province,” said Robert Hogue, senior economist, RBC. “The likelihood of further price increases within a tight housing market may cause further erosion in affordability.”
Much of the upward pressure on prices is the result of fewer MLS® listings being available in the marketplace.
WinnipegREALTORS® president Claude Davis said a clear indication of a tight market was the number of homes selling above their list price last month. In February, 44 per cent of homes sold for over their list price compared to only 22 per cent in February 2009.
“We expect to see a continuation of strong market activity with more listings coming on stream as move-up buyers take advantage of affordable mortgage rates before an expected rise in rates occurs later this year,” Davis added.
The RBC affordability measures for Manitoba, which capture the proportion of pre-tax household income needed to service the costs of owning a home, generally rose in the fourth quarter of 2009 — the higher the measure the more expensive it is to own a home. 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.
Benchmark affordability measures in Manitoba increased in three of four housing categories: the standard townhouse moved up by 0.2 per cent to 23.4 per cent, the standard condominium rose by 0.6 per cent to 21.5 per cent and the standard two-storey home moved up by 0.5 per cent to 38.8 per cent.
On the other hand, the measure for a detached bungalow moved down half a percentage point to 35 per cent.
By comparison, RBC’s housing affordability measure for a detached bungalow shows a marked difference between Winnipeg and other Canadian cities: Vancouver 69 per cent, Toronto 49.1 per cent, Ottawa 40.4 per cent, Montreal 39.1 per cent, and Calgary 37.1 per cent.
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.