Canada's housing affordability rises in 3rd quarter

Thu Nov 22, 2012 12:00am EST
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* Affordability rises as home prices fall, incomes gain

* Rise in affordability reverses previous drop; trend is flat

* Vancouver still least affordable city though prices lower

By Andrea Hopkins

TORONTO, Nov 22 (Reuters) - Falling home prices and an uptick in household income made Canadian home ownership slightly more affordable in the third quarter, but the longer-term trend is largely unchanged, according to a report by RBC Economics released on Thursday.

RBC, Canada's largest bank and a huge mortgage lender, measured affordability as the percentage of monthly pre-tax income for a household needed to cover the typical costs of owning a home, including mortgage payments, utilities and property taxes.

By that measure, the cost of owning a home edged down by 1.0 percentage point to 42.0 percent for a detached bungalow, by 1.2 percentage points to 47.8 percent for a two-story home, and by 0.6 percentage point to 28.0 percent for a condominium, the RBC Housing Affordability index showed.

"The broad affordability picture has been somewhat stationary over the last two years, alternating between periods of improvement and deterioration, resulting in an affordability trend that is, on net, essentially flat," RBC chief economist Craig Wright said in a statement.

"We saw this directionless trend in the third quarter as housing affordability fully reversed the mild erosion witnessed in the first half of the year."   Continued...