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Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

November 12th - 2010

ON THE MARKETS: Ontario's economic confidence and housing affordability slide

Ontarian's economic confidence slipped 18 points (from 97 to 79 points) over the previous quarter, the highest of all regions across Canada -- according to the latest RBC Canadian Consumer Outlook. Just 57 per cent of Ontarians believe the state of the economy is good, down nine points from June and compared to 60 per cent nationally.

Ontarian's economic confidence slipped 18 points (from 97 to 79 points) over the previous quarter, the highest of all regions across Canada -- according to the latest RBC Canadian Consumer Outlook. Just 57 per cent of Ontarians believe the state of the economy is good, down nine points from June and compared to 60 per cent nationally.

At the same time, RBC is also reporting a decline in affordability in its latest Affordability Index. This report states: “Despite a significant slowing in resale market activity in recent months, the cost of homeownership continued to climb across Canada in the second quarter of this year. The combination of higher home prices and mortgage rates strongly contributed to this increase by raising the monthly mortgage servicing charge on a typical home. The strong headwinds finally got the better of the Ontario housing market this spring and summer. After setting new record-high marks this winter, home resales in the province have since fallen precipitously. The slowdown in activity largely reflected various factors – the HST, changes in mortgage lending rules and the rush of first-time homebuyers to lock in low mortgage rates – that brought demand forward earlier this year. Nonetheless, the fact that housing affordability in Ontario continues to reverse the considerable improvements achieved in late 2008 and early 2009 also likely played a role. In the second quarter, RBC Housing Affordability Measures increased for a fourth consecutive time, up between 1.3 and 2.6 percentage points, representing some of the bigger rises among the provinces.”

While their views on the economy may not be overly optimistic, the Consumer Outlook report suggests Ontarians are focused on the financial picture at home and debt management with more than 52 per cent of respondents saying they plan to reduce their debt in the next year or so, and 43 per cent indicating they plan on spending less.

A majority of Ontario residents (82 per cent) don't undertake an official credit/debt review on a yearly basis, slightly above the national average of 78 per cent; however, 64 per cent say they keep close track of their debt. Four-in-ten (38 per cent) are confident that they are managing their debt well and 19 per cent say they're just keeping their head above water.

"Despite a dip in economic confidence, many Ontarians are being proactive and focusing on financial matters that are within their control," said Laura Gainey, regional president, Ontario South West, RBC.

Other provincial highlights include:

  • Nearly three-in-ten (26 per cent) Ontario households are experiencing job anxiety, up four points from last quarter.
  • Just 28 per cent believe the national economy has improved in the last three months, a dramatic decrease of 15 points.
  • Fewer than three in ten (27 per cent) believe the economy will improve in the next three months (down 10 points), and a minority (46 per cent, down 12 points from June) now think it will improve over the next year.
  • Only two-in-ten (20 per cent) believe their local economy has improved (down five points) in the last three months, while the same proportion (20 per cent, down six points) sees it improving in the next three months.
  • Just four-in-ten (37 per cent) believe their own personal situation will improve in the next year (down five points from last quarter).

"The uncertainty of the U.S. economy and the rapid slowing of Ontario's housing market will hamper Ontario's economic growth in the last half of 2010," said Craig Wright, senior vice-president and chief economist, RBC. "However, Ontario's economy will settle down and post an average growth rate of 3.5 per cent in 2010, just slightly stronger than the national average of 3.3 per cent."

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Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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