Housing affordability in Manitoba has deteriorated for the second consecutive quarter, mainly due to rising house prices, according to a new report from RBC Economics.
In its housing affordability index report, the bank said the percentage of household income needed to own a standard bungalow, two-storey home, or condominium climbed by between 0.2 per cent and 0.8 per cent, depending on the type of home, between the final quarter of 2012 and the first quarter of 2013.
And the main contributing factor was strong price gains in the past two quarters in two of the three housing categories — bungalows and condos. It said the average selling price for a standard bungalow rose by 2.1 per cent between Q4 2012 and Q1 2013, while the price of a standard condo climbed by 1.1 per cent.
The good news, the bank said, is that while affordability has deteriorated here, "its still not reaching dangerous levels."
"Manitoba’s existing home market had a record year in 2012. Winter 2013, however, was a different story, with home resales particularly weak in February and March," said Craig Wright, the bank’s senior vice-president and chief economist.
"The weakness might just be the market catching its breath," Wright added, "but it could also reflect the modest deteriorating trend in affordability taking its toll on the province’s homebuyers."
The RBC housing affordability index measures the proportion of pre-tax household income needed to service the costs of owning a home, based on market value. That includes the cost of mortgage payments (principal and interest), property taxes, and utilities. An increase in the index represents deterioration in affordability.
The index for a bungalow grew by eight-tenths of a percentage point to 38.9 per cent. For two-storey homes it rose by 0.2 per cent to 38.7 per cent, and for condos it climbed by 0.4 per cent to 24.4 per cent.