Manitoba's Housing Affordability Worsens

Manitoba's housing affordability weakened for a second consecutive quarter as growth in home prices, higher utility costs, and higher mortgages rates overwhelmed income growth, according to the latest Housing Affordability Index released today by RBC Economics.

"Income growth could not keep pace with rising housing costs and as a result this undermined affordability," said Derek Holt, assistant chief economist, RBC. "However as the market shifts into more balanced territory in 2006 and energy prices continue to decline, Manitoba housing affordability should stabilize going forward."

The RBC Affordability Index for Manitoba, which measures the proportion of pre-tax household income needed to service the costs of owning a home, weakened for all housing types with a detached bungalow coming in at 32.9 per cent. A standard two-story home moved to 32 per cent, a standard townhouse to 18.7 per cent and a standard condo to 17.2 per cent.
While house price gains in Eastern Canada have begun to level off, Manitoba's have been gathering momentum, increasing about 10 per cent over last year. With limited housing availability, in late 2004 and early 2005, not keeping up with growing demand, prices have remained resilient. However, with the number of new listings now increasing, Manitoba should begin to see supply constraints lift and affordability improve.