A surge in new listings helped to push house prices a little lower and make most types of homes a little more affordable in the final three months of 2013, a new Royal Bank report says.
In its latest quarterly Housing Trends and Affordability Report released Tuesday, RBC Economics Research said the cost of owning a standard two-storey home in the province declined by 1.1 percentage points to 38.6 per cent of pre-tax household income during the quarter. And the cost of owning a standard bungalow dipped by 0.6 percentage points to 38 per cent.
The only type of home that bucked that trend was standard condominiums, where home-ownership costs rose by 0.8 percentage points to 24.9 per cent, the bank said.
The report said more listings in the latter part of 2013 meant more choice for homebuyers, which helped to drive prices slightly lower.
And more balanced market conditions should help keep prices rising at a moderate pace in the first half of 2014, it said, although rising interest rates could erode affordability later in the year.
"While we expect the Bank of Canada to leave its overnight rate unchanged in 2014, we forecast an upward drift in bond yields -- the main driver of fixed mortgage rates -- ahead of what is likely to be a gradual pace of policy tightening by both the U.S. and Canadian central banks," the bank said.
Craig Wright, RBC's senior vice-president and chief economist, said the slight decline in prices in the late stages of 2013 kept home ownership in Manitoba relatively affordable compared with most other major Canadian cities.
"Our measures for all housing types in the province stayed reasonably on par with historical norms in the province, suggesting that little affordability pressure is being exerted on Manitoba's homebuyers at the present time," he added.
That's a welcome change from the first three quarters of 2013, when affordability deteriorated in the face of escalating house prices.
The bank said the average price for a bungalow in Manitoba in Q4 was $308,500, which was down 1.1 per cent from the previous quarter. The average price for a two-storey home was $310,500, which was a drop of 2.6 per cent from the previous quarter.
However, the average price for a standard condo rose by 5.5 per cent to $207,600.
The RBC housing affordability measure is based on the cost of owning a detached bungalow, two-storey home or condo at market value. The higher the measure, the more difficult it is to afford a home. For example, an affordability reading of 50 per cent means homeowner costs, including mortgage payments, utilities and property taxes, would take up 50 per cent of a typical household's monthly pre-tax income.
British Columbia continues to have the least affordable housing, with an affordability measure for a standard bungalow of 67.7 per cent. And Vancouver continues to be the least affordable city, with an affordability measure for a bungalow of 81.6 per cent.
Winnipeg was not one of the six cities where affordability was measured.
Nationally, after two straight quarters of modest deterioration, housing affordability improved mildly in Canada in the final quarter of 2013 due to stronger income gains.