The affordability picture has been mixed in Quebec so far this year. The cost of owning freehold homes slipped for two successive quarters, but costs for owning a condominium apartment did not change materially. The RBC measures for bungalows and two-storey homes climbed 1.0 and 1.8 percentage points, respectively, in the second quarter. By contrast, the measure for condominiums barely rose (up marginally by 0.2 percentage points) following a slight decline in the first quarter of 2011. The divergent affordability patterns reflected similarly diverging patterns in home prices whereby twostorey homes and, to a lesser extent, bungalows appreciated notably while some price declines were registered in the condominium category. The cost of owning a two-storey home in the province is now beginning to pinch households’ budget—the RBC measure has moved further above its longterm average—and will likely be a factor for restraining homebuyers in the period ahead. Other housing types remain largely affordable.
Montreal — Affordability erosion not yet worrying buyers
It is increasingly tougher to become a homeowner in the Montreal area. Hefty price increases in the past year hurt the area’s status as an affordable market. While the rate of property appreciation slowed considerably in the second quarter—condo prices even showed declines—the cumulative effect of earlier gains caused the Montreal area to drop a few notches in the rankings of Canada’s most affordable major cities. In the second quarter, the RBC measures rose for all housing types—marginally for condominium apartments (up 0.1 percentage points) but more noticeably for bungalows (up 1.4 percentage points) and two-storey homes (up 2.3 percentage points). The RBC measures for all types are currently above their historical averages— quite markedly in the case of two-storey homes—and the national levels for two of the categories. Poorer affordability did not seem to concern homebuyers much in the second quarter as they increased their purchases of homes
for the second consecutive time. Their enthusiasm might wane, however, if affordability deteriorates further in the period ahead.
Montreal — Affordability erosion not yet worrying buyers
It is increasingly tougher to become a homeowner in the Montreal area. Hefty price increases in the past year hurt the area’s status as an affordable market. While the rate of property appreciation slowed considerably in the second quarter—condo prices even showed declines—the cumulative effect of earlier gains caused the Montreal area to drop a few notches in the rankings of Canada’s most affordable major cities. In the second quarter, the RBC measures rose for all housing types—marginally for condominium apartments (up 0.1 percentage points) but more noticeably for bungalows (up 1.4 percentage points) and two-storey homes (up 2.3 percentage points). The RBC measures for all types are currently above their historical averages— quite markedly in the case of two-storey homes—and the national levels for two of the categories. Poorer affordability did not seem to concern homebuyers much in the second quarter as they increased their purchases of homes
for the second consecutive time. Their enthusiasm might wane, however, if affordability deteriorates further in the period ahead.