BC Housing Affordablility Expected to Improve

VANCOUVER, January 24, 2008
Retaining its title as the least affordable province in Canada in
which to purchase a home, British Columbia’s housing affordability
is expected to improve modestly in 2008, according to a new
housing report issued today by RBC Economics.

"B.C.’s housing market moved into uncharted territory last year
as affordability deteriorated to its worst levels since we started
tracking conditions back in 1985," said Derek Holt, assistant
chief economist, RBC. "We expect affordability rates to see some
modest improvements in 2008 as the province’s housing market
reached a peak stress point late last year."

The RBC Affordability measure for British Columbia, which captures
the proportion of pretax household income needed to service the
costs of owning a home in the province, deteriorated across all housing
segments as the detached bungalow moved to 67 per cent, the standard
two-story home to 71 per cent, the standard townhouse to 50 per cent
and the standard condo to 36 per cent.

Slower demand, coupled with a downward trend in the sales-to-listing
ratio, has helped ease some of the upward pressures on B.C. home
prices. As a result, price gains have started to level off, dropping from
18 per cent in 2006 to 12 per cent last year. An even softer rate of eight
per cent is expected for 2008.

In Vancouver, affordability deteriorated across all housing segments
in 2007, but the pace slowed significantly mid-year. The combination
of more modest house price growth and improved income growth helped
restrain the affordability deterioration. The city’s housing market remains
robust, with annual price growth around 12 per cent and the sales-to-listing
ratio skewed towards sellers. However, with an increased supply of
homes on the market helping to moderate price gains, Vancouver should
see some affordability relief later in the year.

source: RBC.com

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