Atlantic Canada Still Affordable/New housing starts down

With all the trouble surrounding the economy these days it is very nice to see a positive story for once.  After reading this article, the next article I read was how housing starts are down over last year.  It is hard sometimes to decipher what to think.  As I have said before Halifax prices have had only modest increases over the last 10 years not like some of the other Canadian markets.  I look for Halifax to continue this trend next year although probably not at the same pace.  Check out the articles below.

Atlantic market Canada’s newest housing hotspot: RBC

EDITED BY STAFF, TRANSCONTINENTAL MEDIA
The Nova Scotia Business Journal

TORONTO – According to the latest housing report by RBC Economics, rapid price increases in the past two years have eroded Atlantic Canada’s affordability conditions, although some improvement is on the way in
2009.

“Forget the West. The new housing hotspots are in Atlantic Canada,” said Robert Hogue, senior economist at RBC. “St. John’s housing market is firing on all cylinders, trailing only Regina in terms of year-over-year price increases. Saint John and Halifax are also showing solid price momentum, creating favourable conditions for sellers.”

The RBC Housing Affordability measure for Atlantic Canada, which captures the proportion of pre-tax household income needed to service the costs of owning a home, improved slightly across all four classes in the third quarter of 2008 as the benchmark detached bungalow moved to 35.4 per cent, the standard townhouse to 30.3 per cent, the standard condo to 27.6 per cent and the standard two-storey home to 41.2 per cent.

The report noted that despite recent meaningful price gains across the region, housing affordability has not deteriorated excessively during the boom of the past two years. Affordability measures in Atlantic Canada currently stand only five to 13 per cent above long-run averages. Nonetheless, momentum in the region’s market is expected to wane in 2009 as economic uncertainty takes the wind out of its sail.

RBC’s Affordability measure for a detached bungalow for Canada’s largest cities is as follows: Vancouver 74.8 per cent, Toronto 53.3 per cent, Calgary 47.3 per cent, Ottawa 43.3 per cent and Montreal 40.4 per cent.

The report also looked at mortgage carrying costs relative to incomes for a broader sampling of cities across the country, including St. John’s, Saint John, and Halifax. For these cities, RBC has used a narrower measure of housing affordability that only takes mortgage payments relative to income into account.

The Housing Affordability measure, which RBC has compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market. Alternative housing types are also presented including a standard two-storey home, a standard townhouse and a standard condo. The higher the reading, the more costly it is to afford a home. For example, an Affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income. — Daily

Total housing starts decline in Halifax
EDITED BY STAFF, TRANSCONTINENTAL MEDIA
The Nova Scotia Business Journal

HALIFAX – Residential construction continued to moderate in Halifax Regional Municipality (HRM) last month as total starts declined 34 per cent compared to November 2007. According to Canada Mortgage and Housing Corporation’s (CMHC) preliminary data released today for Halifax, there were 118 total housing starts last month, compared with 178 in November 2007.

Single-detached starts recorded a 22 per cent decrease to 97 starts in November compared to 125 in November 2007. Multiples moderated to 21 starts last month – all of which were semi-detached or row housing starts.

“Although single starts were up 12 per cent year-over-year through the first three quarters in HRM, they were on average 16 per cent lower in October and November,” said Matthew Gilmore, senior market analyst with CMHC’s Atlantic Business Centre. “Our recent forecast called for starts to moderate in the fourth quarter and into 2009. The reasons for the decrease include the current economic environment, reduced spillover demand from the existing homes market and rising prices for new construction.”

In urban centres across Canada there were 12,780 total housing starts in November, 28 per cent fewer than the 17,816 starts in November 2007. There were 5,348 single-detached housing starts across Canada last month, 37 per cent less than the 8,490 single starts in November 2007. At 7,432 units, multiple housing starts represented a 20 per cent decrease from the 9,326 units started in November 2007. – Daily Business Buzz

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Andrew Perkins

Your HRM Real Estate Expert