Investor Relations - Fixed Income Presentation
Canadian housing market fundamentals remain sound
RBC
■ While there is scope for housing activity to strengthen in the near-term following weather-related weakness in the
first quarter of the year, housing activity should gradually moderate to levels that are more sustainable and in line
with household formation in Canada
Housing affordability is at reasonable levels across Canada with tensions concentrated in a few local markets
Positive demographics, household income gains and low interest rates are supporting balanced conditions
Policy measures promoting a healthy housing market
■ Household debt service costs ratios remain historically low, with little movement towards higher risk
Lenders maintaining strong underwriting discipline and require extensive documentation
- Most mortgages held on balance sheet and conservative lending policies have led to low delinquency rates
12
Household Debt Service Costs (1)
(Mortgage & non-mortgage interest payments as a % of PDI)
Canada
U.S.
300
Canadian House Price & Labour Income (2)
(Indexed 1990=100)
House Price
Income
11
=
10
9
8
7
6
5
250
200
150
80
100
50
0
4
1990
1992
1994
1996
1998
2000
2002
1990
1992
1994
1996
1998
2000
2002
2004 2006
2008
2010
2004
2006
2008
2010
2012
(1) Statistics Canada, Federal Reserve Board, Bureau of Economic Analysis, RBC Economics Research. PDI: Personal disposable income.
(2) Canadian Real Estate Association, Statistics Canada, RBC Economics Research.
Investor Relations
-
Fixed Income Presentation
2012
6View entire presentation