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Home ownership became more affordable across Canada in Q3 2014, despite a broad increase in home prices, says RBC Economics Research.

“Owning a home was a bit easier in Q3 thanks to rising household incomes, low and steady interest rates, and cheaper utility costs in many parts of the country – Toronto even saw some relief,” says Craig Wright, senior vice president and chief economist, RBC. “With home re-sales sitting close to the highest levels since early 2010, the overall tone of Canada’s housing market is quite solid.”

Read: Housing is overvalued, says CMHC

Declines in fixed mortgage rates earlier this year have strengthened the housing market since spring. RBC anticipates interest rates to dampen market growth in 2015, with expectations that the Bank of Canada will raise its overnight rate mid-year and longer-term rates will rise well before that.

“We expect the next stage of the housing cycle to be a transition toward lower resales and slower price increases,” says Wright.

The RBC housing affordability index captures the proportion of pre-tax household income that would be needed to own a given home at current market values. The lower the measure, the more affordable the home.

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During the third quarter of 2014, affordability measures at the national level fell by 0.2 percentage points to 47.8% for two-storey homes and by 0.3 percentage points to 27.1% for condo apartments. The measure for detached bungalows inched higher by 0.1 percentage points to 42.6%.

“A trend that jumped out in the latest data was a further broad improvement in affordability of condos where a strong majority of markets across Canada saw the measure for the segment fall,” said Wright. “Condos no doubt continue to be the more affordable ownership option in every market.”

RBC’s housing affordability measure for the benchmark detached bungalow in Canada’s largest cities in the third quarter of 2014 is as follows: Vancouver 83.6 (up 1.6 percentage points from the previous quarter); Toronto 56.3 (up 0.3 percentage points); Montreal 37.0 (down 0.3 percentage points); Ottawa 35.7 (down 0.3 percentage points); Calgary 34.2 (up 0.6 percentage points); Edmonton 31.9 (up 0.2 percentage points).

Read: U.S. existing home sales climb 1.5%

Originally published on Advisor.ca

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