Ottawa continues to boast the most affordable homes among many of Canada's biggest cities, a new report shows. According to the Royal Bank's quarterly Housing Affordability Index released yesterday, the percentage of pre-tax household income needed to service the costs of owning a detached bungalow in Ottawa stands at 30.8%.
"Ottawa's affordability remains relatively stable and has managed to avoid the volatile swings seen in other markets across the country," the report noted. Condos saw the strongest deterioration in affordability in Ottawa, rising to 21.8% of household income.
Nationally, housing affordability diminished for the fourth straight quarter, despite stable borrowing rates and a decline in utility costs. The good news is the cost to own a home will likely abate somewhat next year, RBC Economics said. House prices continued to climb across the country, the economics wing of Royal Bank said in releasing its index.
"Across Canada, housing affordability further eroded as rising house prices outpaced income growth in the third quarter of 2006," assistant chief economist Derek Holt said in a release. "However, affordability is likely to improve slightly next year as the lagged effects of fourth-quarter mortgage rate declines, easing energy price pressures and a topping out of home price appreciation will have a positive impact for home buyers." The pace of the decline in housing affordability eased somewhat during the quarter almost everywhere except Alberta, though that province will likely see an improvement in affordability as well in 2007, Holt said.
According to the RBC index, which measures the proportion of pre-tax household income needed to service the costs of owning a home, condos remain the most affordable housing class, with an index of 28%.
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