Strong Economy Keeps Home Ownership Affordable in Alberta
Monday, May 26, 2014
Alberta has some of Canada's highest house prices, but it is also the province in which the houses are most affordable. There are several reasons for this phenomenon.
- Alberta has shown higher economic growth and stronger economic indicators than all other Canadian provinces. This enables Albertans to spend more on houses than their peers in other provinces. For example, Alberta's 4.9 per cent unemployment compares well with Ontario's 7.3 per cent. 73 per cent of Albertans participate in the economy, compared with 65.9 per cent of Ontarians. The average Albertan earns $1,134.36 per week, while the average Ontarian takes $932.28 home.
- Alberta's economic trend is upward, and by a larger margin than other provinces. For example, the weekly earnings of the average Albertan are up by 5.4 per cent from 2013, while the average Ontarian is only 2.42 per cent richer per week.
- Alberta's strong economy has drawn many Canadian and international migrant workers to the province, which has led to a strong demand for housing. This, in turn, has led to high house prices. Alberta's average house price was $380,969 in 2013, which is expected to rise to $391,100 in 2014. The most expensive city is Calgary, with its average house price of $449,000 in 2014. Moreover, while the average Canadian house price increased by five per cent from 2012 to 2013, houses in Calgary climbed by more than eight per cent.
- The economy is clearly keeping up, however. In Calgary the average house costs 4 times the average family's monthly income. Demographia, a global affordability tracker, deems houses to be unaffordable if they cost 5.1 times the average family's income. Toronto and Vancouver illustrate this with their respective houses costing 7.2 and 12.4 times a family's income.
- Another useful statistic is the percentage of pre-tax income that families spend on their homes. The national average on a detached bungalow is 42.7 per cent. Residents of Edmonton and Calgary spend 34 per cent and 33 per cent respectively. The household incomes in Vancouver and Ontario are nowhere near keeping up, since they spend around 80 per cent of their pre-tax income on their homes.
The 21st century is a good period to live in our beautiful province.