Report: price increases only place moderate pressure on home buyers

Manitoba’s housing affordability has slightly eroded in the second quarter of 2010 as a result of higher home prices and mortgage rates, but that hasn’t put too much added pressure on home buyers, according to the latest Housing Affordability report issued today by RBC Economics.
In fact, Manitoba still ranks among the most affordable housing markets in Canada.  
“While monthly resale activity slipped back to the low levels witnessed during the late-2008 and early-2009 period, sellers kept a firm hand on pricing by reducing the supply of homes available for sale in the province, resulting in escalating prices, particularly for two-storey homes,” said Robert Hogue, senior economist at RBC. 
“Nonetheless, home buyers are feeling only moderate pressure, as affordability levels still stand close to long-term averages."
According to the RBC report, Manitoba’s second quarter housing affordability measures rose between 0.5 and 2.2 percentage points, with two-storey homes representing the high end of the range.
The measures used in the report deal with the province’s proportion of pre-tax household income needed to service the costs of owning a home. A rise in the measure means homes are less affordable. For example, 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.
In Manitoba, the measure for the benchmark detached bungalow moved up to 36 per cent, an increase of 0.8 of a percentage point from the previous quarter; the standard townhouse rose slightly to 24.7 per cent, up 1.1 percentage points; the standard two-storey home increased to 39.3 per cent, up 2.2 percentage points; and the standard condominium edged up to 21.6 per cent, up 0.5 of a percentage point.
Ontario and British Columbia saw the most significant deterioration in affordability in the second quarter, however, some improvements in specific housing types occurred in Alberta (condominiums) and Saskatchewan (townhouses). 
All other provinces showed modest erosion, with the exception of two-storey homes in Manitoba where the rise in the RBC measure was quite substantial.
The measure for a detached bungalow in Canada’s largest cities is as follows: Vancouver 74.0 per cent, up 1.7 percentage points from the last quarter; Toronto 50.2 per cent, up 2.4 percentage points; Montreal 43.2 per cent, up 1.8 percentage points; Ottawa 41.2 per cent, up 3.6 percentage points; Calgary 39.2 per cent, up 0.9 percentage points; and Edmonton 34.7, up 2.5 percentage points.