Calgary, Edmonton housing more affordable than other major Canadian cities

Both cities fared better than Vancouver, Toronto and Montreal when it comes to the share of income needed to cover ownership costs

Mario ToneguzziCalgary and Edmonton continue to be affordable places to own a home in Canada compared to the country’s other major metropolitan centres.

The quarterly housing affordability study, released on Friday by RBC Economic Research, indicated both Alberta cities fared much better than Vancouver, Toronto and Montreal when it comes to the share of income a household would need to cover ownership costs.

For all housing types, the results were: Canada 53.9 per cent, Vancouver 88.4 per cent, Calgary 43.9 per cent, Edmonton 28.4 per cent, Toronto 75.9 per cent, Ottawa 38.6 per cent and Montreal 44.1 per cent.

The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and utilities based on the average market price for single-family detached homes and condo apartments, as well as for an overall aggregate of all housing types in a given market.

“Rising interest rates are depriving Calgary homebuyers from the benefits of stagnating home prices. Higher rates have boosted home ownership costs in the past year and kept RBC’s aggregate affordability measure on a modest upward trajectory. The measure rose by 1.1 percentage points to 43.9 per cent in the second quarter – just above the long-run average of 41.0 per cent. While not as expensive as in Vancouver, Toronto and Victoria, Calgary home prices are still among the highest in the country. This makes ownership costs in the area quite sensitive to interest rate hikes. It also means that the mortgage stress test has a greater impact than in lower-priced markets, which has been a key factor depressing home resale activity in Calgary this year,” said the report.

“Affordability pressures still aren’t a big issue in Edmonton. RBC’s aggregate measure for the area, at 28.4 per cent in the second quarter, remains well below its long-term average of 34.1 per cent despite rising slightly by 0.5 percentage points from the first quarter. Buyers appear to be unimpressed, however. Many of them opted for the sidelines this year, which drove home resales to a seven-year low in the second quarter. The degree of softness was surprising considering the steady progress in the provincial economy’s recovery. The new stress test could well be the factor sending buyers to the sidelines.”

Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald, including 12 years as a senior business writer.


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