Sep 27, 2012, Home affordability favourable in Alberta

Alberta’s housing market seems to be in pretty good shape these days compared with some other major Canadian markets.

A decline in sales elsewhere in the country has triggered anxiety that prices might soon follow, says Will van’t Veld, economist with ATB Financial.

“Alberta is certainly no stranger to real estate exuberance,” he says. “But, in many ways, our province has managed to pull off what analysts everywhere hope for: a soft landing. Compared to other places in Canada, the run-up in prices before the recession was far more dramatic, but the surge in prices post-recession was nearly non-existent after the initial drop, greatly improving affordability as wages kept rising and interest rates dropped like a rock.”

Between June 2008 and June 2012, average industrial wages have increased by about $143 per week in Alberta compared with about $87 per week nationally, he says. This has helped make Alberta a relatively affordable place to live. As of August 2012 the ratio of monthly wage income to pay the average residential mortgage payment was 39 per cent in Alberta, compared with 58 per cent in British Columbia and 47 per cent in Ontario, he adds.

“In fact, due to lower taxes and more non-standard pay structures (such as bonuses), it’s likely that home affordability in Alberta is even more favourable relative to Canada’s other large provinces than the above ratio would suggest,” explains van’t Veld.