Ottawa housing at affordability limit: RBC
The price of housing in Ottawa is starting to slow the price of buying in the market, according to a new report by the Royal Bank of Canada.
RBC's quarterly housing trends and affordability index stated home resales fell 4.5 per cent in the first quarter of 2011 and 4.2 per cent in the second, a trend it said was linked to moderate price increases across all housing types.
On average, housing costs took up 41.2 per cent of a household income, up 1.3 percentage points.
"Although still comparing favourably against other major Canadian cities, affordability in the Ottawa area is likely pinching local homebuyer demand," RBC stated.
"Any further deterioration will put that market at greater risk of slowing further."
Across Canada, RBC said home price and small mortgage rates increases decreased affordability in most major markets, but in most cases not in a big way.
The exception was Vancouver, where "extremely poor and rapidly eroding affordability ... is somewhat skewing the national picture," RBC stated.
On a national average basis, condominiums were up 0.8 percentage points to 29.2 per cent, detached bungalows increased 1.7 per cent to 43.3 per cent, and two-storey homes bumped up 1.2 per cent to 49.3 per cent.
RBC also called for delaying any interest rate hikes until at least the middle of next year, given ongoing turmoil in world markets.