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TORONTO, Nov. 29 /CNW/ - Despite recording substantial affordability improvements since early 2008, housing demand in Alberta is still a shadow of its former self from just a few years ago and there are few signs that it is picking up meaningfully, according to the Housing Trends and Affordability report released today by RBC Economics Research.

"Alberta's housing market conditions remained quite weak in the third quarter and buyers have clearly emerged in the driver's seat, causing home prices to decline and contributing to further improvement affordability," said Robert Hogue, senior economist, RBC. "Homeownership in the province is among the more affordable in Canada in absolute terms and relative to historical averages which bodes well for housing demand once the provincial job market improves."

The RBC report notes that housing affordability in the province improved in the third quarter of 2010 with home prices declining between 0.6 per cent and 2.2 percentage points depending on the housing type.

The RBC Housing Affordability Measures for Alberta, which capture the province's proportion of pre-tax household income needed to service the costs of owning a home, eased across all housing categories in the third quarter, more than reversing modest rises in the second quarter of 2010. The measure for the benchmark detached bungalow moved down to 32.5 per cent (a drop of 1.8 percentage points from the previous quarter), the standard condominium to 20.7 per cent (down 0.8 percentage points) and the standard two-storey home to 35.6 per cent (down 1.8 percentage points).

The RBC report notes that Calgary's weak housing demand mirrors the city's sluggish job market where employment during the last year was stagnant at best. Meanwhile, the supply of homes for sale continues to be plentiful maintaining the downward pressure on property values. Calgary home prices fell across all housing categories in the third quarter contributing to further improvements in affordability. RBC's affordability measures declined by 1.2 to 2.3 percentage points, representing the third consecutive drop for two-storey homes and condominiums.

"The good news is that the Calgary market is no longer running in reverse; however, the bad news is that it appears to be running in low gear," added Hogue. "Despite relatively affordable homeownership in Calgary, only modest improvements in home resales have recently occurred with levels moving up to those witnessed 10 years ago."

All provinces saw improvements in affordability in the third quarter, particularly in British Columbia where elevated property values amplified the effect of the decline in mortgage rates on monthly mortgage charges. Ontario also experienced some notable drops in homeownership costs, pushing down the RBC Measures below their long-term average in the province for bungalows and condominiums. Alberta and Manitoba are the only two provinces where the RBC Measures stand below their long-term average in all housing categories, indicating little stress in these markets.

RBC's Housing Affordability Measure for a detached bungalow in Canada's largest cities is as follows: Vancouver 68.8 per cent (down 5.4 percentage points from the last quarter), Toronto 47.2 per cent (down 3.0 percentage points), Montreal 41.7 per cent (down 1.3 percentage points), Ottawa 38.2 per cent (down 2.9 percentage points), Calgary 37.1 per cent (down 2.0 percentage points) and Edmonton 32.7 per cent (down 2.0 percentage points).

The RBC Housing Trends and Affordability Measure, which has been compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market in Canada. Alternative housing types are also presented including a standard two-storey home and a standard condominium. 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.

Click HERE for the complete article.

The full RBC Housing Affordability report is available online, as of 8 a.m. ET today.

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