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ZT: Cost of home ownership continues to rise: RBC
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Canadian Press+ z1 C4 {6 ?6 f5 z# h; J
, z$ [- U* c5 j7 A# rWednesday, September 12, 2007; k ^0 C, i9 Y( ?# Q7 c) C
5 a& Y( w4 f6 n( _3 cTORONTO — The cost of owning a home in Canada continued to climb in the second quarter as affordability in Western Canada showed the biggest change, according to a new report by the Royal Bank.# e; q8 m+ `2 s1 F0 b
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Saskatchewan suffered its worst ever quarterly deterioration of affordability on record, according to the bank, as an influx of people caught the housing supply off guard.
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“In the second quarter, Canada's housing affordability experienced one of the largest and most broadly based quarterly deteriorations since the mid-1990s,” said Derek Holt, assistant chief economist, RBC.
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- v: {+ c2 B* w0 b" D& Q2 ~) }“Higher house prices, mortgage rates, utilities and property taxes all combined to drive the country-wide deterioration.”- |- `' x0 q- @
* f' C5 \7 k6 ~; ?The report measures the proportion of pre-tax household income needed to service the costs of owning a home. The higher the reading, the more costly it is to afford a home
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+ `! ^+ {5 i1 c% J. k8 CThe bank said a standard condo was the most affordable, requiring about 29 per cent of income compared with 27.5 per cent in the first quarter.
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A standard townhouse was next at 33 per cent, up from 31.5 per cent in the first quarter followed by a detached bungalow which increased from 39 per cent to 41 per cent in the second quarter.
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A standard two-storey home was 46 per cent, up from 44 per cent in the first three months of the year.
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Saskatchewan, Alberta and B.C. saw the biggest increase in costs in the quarter.
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Affordability fell about 20 per cent in Saskatchewan with no signs that prices were letting up yet, but the bank said the high prices were starting to weigh on demand., ]% B: T. b- _( Q6 k7 }/ q7 n
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Among Canada's largest cities, a detached bungalow in Vancouver was the most expensive with the proportion of pre-tax household income needed to own a home coming in at 71 per cent. Toronto and Calgary followed at 45 per cent, Montreal at 36 per cent and Ottawa at 31 per cent.% H% O% M$ ~* H; W
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“Market conditions in Vancouver have loosened up during the year, but conditions remain tilted in favour of a seller's market and are still supportive of fairly strong price gains,” the report said. |
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