RBC Business Segments and Market Strategy
Canadian housing market fundamentals remain sound
RBC
■ Balanced demand-supply conditions continue to prevail in close to half of the markets in Canada with the exceptions
being some markets in British Columbia and those in and around the Greater Toronto region
Housing affordability is at reasonable levels across Canada with pressure concentrated in a few local markets
Steady population growth, household income gains and low interest rates are supporting balanced conditions
■ A slowdown in housing market activity in oil-exposed provinces (Alberta, Saskatchewan) is being offset by strength in
other regions of the country (net oil consumers) with support from highly accommodative borrowing conditions
■
▪ Over the forecast horizon, we expect that an erosion of housing affordability on account of rising interest rates will
weigh on overall housing activity, which is expected to gradually ease to lower, more sustainable levels
Relatively stable household debt service cost ratios, with little movement towards higher risk
■ Lenders maintaining strong underwriting discipline and require extensive documentation
– Most mortgages being held on balance sheet and conservative lending policies have led to low delinquency rates
Sales-to-New Listings Ratio (1)
(Residential unit sales to new residential listings)
Household Debt Service Costs (2)
(Mortgage & non-mortgage principal & interest payments
as a % of PDI)
1.00
0.90
16
0.80
Seller's market
0.70
14
0.60
12
12
0.50
Balanced market
10
0.40
0.30
8
Buyer's market
0.20
6
0.10
0.00
4
1991
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
2015
1990
1992
1994
1996
1998
2000 2002
2004
2006
2008
2010
2012
2014
Canadian Housing Market
(1) Canadian Real Estate Association, RBC Economics Research. (2) Statistics Canada, RBC Economics Research. PDI: Personal Disposable Income.
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