Owning a home in Calgary at market price remains more affordable than it has been on average since the middle of the 1980s, says a new report released Monday by RBC Economics Research. But the latest Housing Trends and Affordability Report said movements in oil prices are likely to exert a stronger influence on the market direction in the short term.
“Alberta’s housing market is still feeling the impact from the oil price shock,” said Craig Wright, senior vice-president and chief economist, RBC. “That said, the dust began to settle this spring, and we saw a gradual recovery in confidence, which helped rebalance demand-supply conditions. Home re-sales started to turn around, and sellers no longer rushed to list their properties.”
RBC said prices remained under slight downward pressure for the most part in the second quarter, which helped keep the cost of home ownership in the province on a descending course from the first quarter.
The RBC Housing Affordability measures, which capture the proportion of pre-tax household income needed to service the costs of owning a home at market values, fell slightly in Calgary for both two-storey homes, by 0.8 percentage points to 31.9 per cent, and bungalows, by 0.4 percentage points to 32.4 per cent. The measure for condos stayed relatively the same, rising by 0.1 percentage points to 19.5 per cent.
Across the province, the measures fell 0.5 percentage points to 32.5 per cent for two-storey homes and 0.1 percentage points to 31.7 per cent for bungalows, while rising 0.2 percentage points to 20.1 per cent for condos.
In the second quarter, RBC said national affordability measures rose by 0.7 percentage points to 43.3 per cent for bungalows and by 0.4 percentage points to 48.3 per cent for two-storey homes. The measure for condominiums remained unchanged at 27.1 per cent.
RBC’s Housing Affordability measure for the benchmark detached bungalow in Canada’s largest cities was: Vancouver 88.6 (up 3.0 percentage points); Toronto 59.4 (up 2.1 percentage points); Montreal 36.0 (down 1.2 percentage points); Ottawa 35.4 (unchanged); Calgary 32.4 (down 0.4 percentage points); Edmonton 32.5 (down 0.4 percentage points).
“With home resales beginning to turn around and sellers no longer rushing to list their properties in the spring, there was evidence that confidence slowly returned to the Alberta market in the second quarter following the hard blow delivered by the oil price plunge in the previous two quarters,” said the report.
“These developments helped rebalance demand-supply conditions; however, prices still remained under slight downward pressure for the most part in the second quarter, thereby contributing to keep the cost of home ownership on a generally downward course in the province.”
It said recovery in oil prices in the second quarter boosted buyers’ confidence to jump back in play and reduced sellers’ eagerness to get out.
“However, this boost to market sentiment may be short lived if a resumption of the slide in oil prices in the third quarter persists,” it said.