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ZT: Cost of home ownership continues to rise: RBC
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2 X' W6 y+ }8 UCanadian Press
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Wednesday, September 12, 2007
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TORONTO — The cost of owning a home in Canada continued to climb in the second quarter as affordability in Western Canada showed the biggest change, according to a new report by the Royal Bank.
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Saskatchewan suffered its worst ever quarterly deterioration of affordability on record, according to the bank, as an influx of people caught the housing supply off guard./ T" \6 t/ c5 ^5 D g" W" H
+ A" }" E. h7 l5 a“In the second quarter, Canada's housing affordability experienced one of the largest and most broadly based quarterly deteriorations since the mid-1990s,” said Derek Holt, assistant chief economist, RBC.
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" f0 \* t3 {5 r; E% q1 b( D“Higher house prices, mortgage rates, utilities and property taxes all combined to drive the country-wide deterioration.”3 K3 q( n0 [: D* w6 o+ d* \
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The report measures the proportion of pre-tax household income needed to service the costs of owning a home. The higher the reading, the more costly it is to afford a home# {1 {7 v3 g" O4 `! p5 F
3 B# T8 d: i& H8 ?! ]& s. a" YThe bank said a standard condo was the most affordable, requiring about 29 per cent of income compared with 27.5 per cent in the first quarter. A& r& U/ R! r2 q/ c
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A standard townhouse was next at 33 per cent, up from 31.5 per cent in the first quarter followed by a detached bungalow which increased from 39 per cent to 41 per cent in the second quarter.
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' Q0 a% [ J: B& U# b; fA standard two-storey home was 46 per cent, up from 44 per cent in the first three months of the year." g; p/ C: t% T% y3 Y( ]
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Saskatchewan, Alberta and B.C. saw the biggest increase in costs in the quarter.
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Affordability fell about 20 per cent in Saskatchewan with no signs that prices were letting up yet, but the bank said the high prices were starting to weigh on demand.
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9 X" D3 p9 w6 a, `0 k" ^5 FAmong Canada's largest cities, a detached bungalow in Vancouver was the most expensive with the proportion of pre-tax household income needed to own a home coming in at 71 per cent. Toronto and Calgary followed at 45 per cent, Montreal at 36 per cent and Ottawa at 31 per cent.
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“Market conditions in Vancouver have loosened up during the year, but conditions remain tilted in favour of a seller's market and are still supportive of fairly strong price gains,” the report said. |
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