OTTAWA – Owning a home in Canada is getting more affordable but that trend could soon end as the real estate market continues to recover, according to a report Wednesday by RBC Economics.
RBC said costs related to home ownership eased in the second quarter of 2009 for the fifth-straight three-month period, with "modest improvement" seen across the country.
"Following the biggest quarterly improvements on record in the first quarter and continued improvement in the second quarter, the national home affordability level has been restored to pre-housing boom levels," said Robert Hogue, RBC senior economist said Wednesday.
"However, the recuperative phase of the affordability cycle seems to be drawing to a close with housing prices firming up in many parts of the country and mortgage rates no longer trending downward."
RBC measures affordability by the proportion of pre-tax household income needed to service the costs of owning a home.
Costs for RBC’s benchmark home, a detached bungalow, declined to 0.6 percentage points to 39.1 per cent in the second quarter. Meanwhile, costs for a standard townhouse fell 0.6 points to to 31.5 per cent, a standard condominium eased 0.4 points to 26.9 per cent and a standard two-storey home was down 0.6 points to 44.4 per cent.
In Vancouver, the proportion of pre-tax income needed to maintain a detached bungalow was 63.4 per cent. In Toronto, ownership costs worked out to 46.5 per cent, while in Ottawa it was 38.6 per cent, Montreal 37.3 per cent and Calgary 35.7 per cent.
"The levelling off of home affordability is not expected to stop the impressive resurgence in the housing market," Hogue said. "Supply of properties for sale is dropping as demand bounces back, which is working to heat up prices again in many parts of the country."
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