December 8, 2008

Report: Canadian housing in downturn

Housing affordability is on a downturn in Canada, but the situation is not as dire as in the United States, a report by RBC Economics in Toronto said Monday.

Since 1985, RBC has published an affordability index in which the higher the number the more costly it is to own and maintain a home.

Across Canada, a standard condominium remained the most affordable housing type. It required 31.4 percent of pre-tax household income in the third quarter of 2008, followed by a standard town house at 36.9 percent. Third was a detached bungalow at 45.7 percent. A standard two-story home remained the least affordable housing type at 52 percent, the report said.

RBC senior economist Robert Hogue said factors plaguing the United States, such as the sub-prime mortgage crisis and bank instability, are less of an issue in Canada.

While the Canadian housing sector is entering a cyclical downturn, the risk of experiencing a U.S.-style meltdown is remote, Hogue said in the report. Many of the factors that triggered the collapse in the United States are either absent or of much lower significance on this side of the border.