The effects of slumping oil prices on housing affordability remained modest and largely isolated to Calgary during the fourth quarter of 2014, but “more substantial consequences are likely to emerge in the coming quarters,” says a new report released Tuesday by RBC Economics.
The latest Housing Trends and Affordability Report said affordability improved in Calgary from the previous quarter as homebuyers “exited the market en masse” in December with listings rising and major cutbacks in the oil industry contributed to a drop in housing market confidence.
That continued in the early part of 2015 as MLS sales in Calgary dropped more than 30 per cent year-over-year in both January and February.
RBC’s affordability measures for Calgary in the fourth quarter of 2014 fell 0.2 percentage points to 20.0 per cent for condos, by 0.4 percentage points to 33.9 per cent for two-storey homes and by 0.6 percentage points to 33.7 per cent for bungalows.
The RBC Housing Affordability measure captures the proportion of median pre-tax household income required to pay the cost of a mortgage on an existing housing unit at going market prices, including principal and interest, property taxes and utilities.
The report said RBC’s affordability measures for Alberta were stable for both two-storey homes (33.9 per cent) and condos (20.4), while the measure for detached bungalows eased by 0.4 percentage points to 32.4 per cent.
Nationally, affordability measures rose by 0.1 per cent for bungalows to 42.7 per cent and by 0.2 per cent for two-storey homes to 48.1 per cent. It was stable at 27.4 per cent for condos.
RBC’s housing affordability measure for the benchmark detached bungalow in Canada’s largest cities in the fourth quarter: Vancouver 82.4 (down 1.2 percentage points)); Toronto 56.8 (up 0.8 percentage points); Montreal 37.3 (unchanged); Ottawa 36.0 (up 0.2 percentage points); Calgary 33.7; and Edmonton 33.5 (up 0.1 percentage points).
"Calgary has remained an affordable city and that really hasn’t changed. We’re still one of the most affordable big cities next to Edmonton and that position hasn’t changed,” said the president of the Calgary Real Estate Board.