TORONTO - The cost of home ownership became more affordable in the most recent quarter due to a modest decline in home prices and gains in Canadian household incomes, according to a Royal Bank study.

RBC's affordability index for a detached bungalow stood at 42 per cent of income nationally in the third quarter.

That means an owner would need to spend 42 per cent of pre-tax annual income to pay for mortgage payments, utilities and property taxes — one percentage point lower than in the second quarter of 2012.

That assumes an average home price of $362,100 and an average qualifying income of $78,100, but those measures varied widely from market to market.

The index fell even more for two-storey homes, by 1.2 percentage points to 47.8 per cent and eased 0.6 percentage points to 28 per cent for condos.

"The costs of owning a home at current market prices took a smaller bite of household budget in all major markets in Canada in the third quarter of 2012," the report said.

The bank, which publishes the index on a quarterly basis, says ultra-low interest rates have been the key factor in keeping affordability levels from reaching dangerous levels in recent years.

Still, top government officials have warned that low interest rates are encouraging some buyers to spend beyond what they'll be able to afford when rates inevitably rise. Household debt stands at a record 163 per cent of income. That means for every dollar Canadians earn, they owe $1.63 in debt.

Despite the recent improvement in affordability, RBC said the amount of income to service home ownership costs continues to be higher than long-term averages.

RBC notes that Canada’s housing market cooled further in the third quarter, partially because of the effects of a fourth round of rule changes to government-backed mortgage insurance. The new rules were brought it to deter those most vulnerable buyers, including those exposed to a sudden rise in interest rates.

The bank expects the negative effect of the changes on home sales will ease by the end of the year and that resale activity will stabilize next year.

The July-September quarter fully reversed the mild erosion in affordability that occurred during the first half of 2012, said RBC chief economist Craig Wright.

"The broad affordability picture has been somewhat stationary over the last two years, alternating between periods of improvement and deterioration, resulting in an affordability trend that is, on net, essentially flat," Wright said.

Wright expects the Bank of Canada to begin raising its overnight lending rate for banks — which affects bank's prime lending rates — from the current one per cent in the second half of next year, assuming the euro crisis remains in check and U.S fiscal issues are addressed.

"This, along with the expected continued growth in household income, will lessen the risk of marked erosion in affordability," he said.

As is often the case, Vancouver's extremely expensive real-estate skewed the national figures.

"The cost of owning a home took a smaller bite out of household pocketbooks in the third quarter as home prices fell – most notably in the Vancouver area, though it remains the least affordable market in Canada by a wide margin," explained Wright.

The index in Vancouver stood at 83.2 per cent of income, followed by Toronto at 52.4 per cent, Montreal 40.2 per cent, Ottawa at 38.7 per cent, Calgary at 38.3 per cent and Edmonton at 31.1 per cent.

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  • Newfoundland: $2.5 Million

    This surprisingly modest house at 34 Battery Road in St. John's is a historic property dating back to the 1870s. The six-bedroom, 3,500-square-foot house overlooks St. John's Harbour and suggests that, on the Rock, even the wealthy are down-to-earth. Source: <a href="http://remax.nf.ca/">Re/Max</a>

  • Newfoundland: $2.5 Million

    This surprisingly modest house at 34 Battery Road in St. John's is a historic property dating back to the 1870s. The six-bedroom, 3,500-square-foot house overlooks St. John's Harbour and suggests that, on the Rock, even the wealthy are down-to-earth. Source: <a href="http://remax.nf.ca/">Re/Max</a>

  • Newfoundland: $2.5 Million

    This surprisingly modest house at 34 Battery Road in St. John's is a historic property dating back to the 1870s. The six-bedroom, 3,500-square-foot house overlooks St. John's Harbour and suggests that, on the Rock, even the wealthy are down-to-earth. Source: <a href="http://remax.nf.ca/">Re/Max</a>

  • Prince Edward Island: $6.9 Million

    If Anne of Green Gables were around today sh'ed probably want to switch up her seven-gabled house for this 13,000-square-foot home that overlooks the red-earth bluffs of P.E.I.'s north coast. Six bedrooms and nine bathrooms feature in this house that sits on 11 acres of land. Source: <a href="http://www.century21pei.com/">Century 21 Northumberland</a>

  • Prince Edward Island: $6.9 Million

    If Anne of Green Gables were around today sh'ed probably want to switch up her seven-gabled house for this 13,000-square-foot home that overlooks the red-earth bluffs of P.E.I.'s north coast. Six bedrooms and nine bathrooms feature in this house that sits on 11 acres of land. Source: <a href="http://www.century21pei.com/">Century 21 Northumberland</a>

  • Prince Edward Island: $6.9 Million

    If Anne of Green Gables were around today sh'ed probably want to switch up her seven-gabled house for this 13,000-square-foot home that overlooks the red-earth bluffs of P.E.I.'s north coast. Six bedrooms and nine bathrooms feature in this house that sits on 11 acres of land. Source: <a href="http://www.century21pei.com/">Century 21 Northumberland</a>

  • Prince Edward Island: $6.9 Million

    If Anne of Green Gables were around today sh'ed probably want to switch up her seven-gabled house for this 13,000-square-foot home that overlooks the red-earth bluffs of P.E.I.'s north coast. Six bedrooms and nine bathrooms feature in this house that sits on 11 acres of land. Source: <a href="http://www.century21pei.com/">Century 21 Northumberland</a>

  • New Brunswick: $2.5 Million

    You can really get some space for your money in New Brunswick. This 20-bedroom, 11-bathroom resort in Alma, N.B. — composed of three buildings including a chalet — sits on no fewer than 450 acres of land, next to Fundy National Park. There is a 40-acre man-made lake on the property, as well as four islands, picnic areas, row boats, paddle boats, tennis courts amd two garages. Source: <a href="http://www.monctonroyallepage.ca/">Royal LePage Moncton</a>

  • New Brunswick: $2.5 Million

    You can really get some space for your money in New Brunswick. This 20-bedroom, 11-bathroom resort in Alma, N.B. — composed of three buildings including a chalet — sits on no fewer than 450 acres of land, next to Fundy National Park. There is a 40-acre man-made lake on the property, as well as four islands, picnic areas, row boats, paddle boats, tennis courts amd two garages. Source: <a href="http://www.monctonroyallepage.ca/">Royal LePage Moncton</a>

  • New Brunswick: $2.5 Million

    You can really get some space for your money in New Brunswick. This 20-bedroom, 11-bathroom resort in Alma, N.B. — composed of three buildings including a chalet — sits on no fewer than 450 acres of land, next to Fundy National Park. There is a 40-acre man-made lake on the property, as well as four islands, picnic areas, row boats, paddle boats, tennis courts amd two garages. Source: <a href="http://www.monctonroyallepage.ca/">Royal LePage Moncton</a>

  • New Brunswick: $2.5 Million

    You can really get some space for your money in New Brunswick. This 20-bedroom, 11-bathroom resort in Alma, N.B. — composed of three buildings including a chalet — sits on no fewer than 450 acres of land, next to Fundy National Park. There is a 40-acre man-made lake on the property, as well as four islands, picnic areas, row boats, paddle boats, tennis courts amd two garages. Source: <a href="http://www.monctonroyallepage.ca/">Royal LePage Moncton</a>

  • Nova Scotia: $6.7 Million

    This newly-built, 6,000-square-foot house in Ketch Harbour, N.S., sits on the granite shoreline of the Atlantic Ocean and features "a series of interlocking pavilions constructed of reinforced concrete and window walls of star fire glass to capture the amazing, endless ocean views," as the realtor describes it. Only three bedrooms in this house, but what a view. Source: <a href="http://www.tradewindsrealty.com/">Tradewinds Realty</a>

  • Nova Scotia: $6.7 Million

    This newly-built, 6,000-square-foot house in Ketch Harbour, N.S., sits on the granite shoreline of the Atlantic Ocean and features "a series of interlocking pavilions constructed of reinforced concrete and window walls of star fire glass to capture the amazing, endless ocean views," as the realtor describes it. Only three bedrooms in this house, but what a view. Source: <a href="http://www.tradewindsrealty.com/">Tradewinds Realty</a>

  • Nova Scotia: $6.7 Million

    This newly-built, 6,000-square-foot house in Ketch Harbour, N.S., sits on the granite shoreline of the Atlantic Ocean and features "a series of interlocking pavilions constructed of reinforced concrete and window walls of star fire glass to capture the amazing, endless ocean views," as the realtor describes it. Only three bedrooms in this house, but what a view. Source: <a href="http://www.tradewindsrealty.com/">Tradewinds Realty</a>

  • Quebec: $18.9 Million

    The realtor selling this property suggests you may want to build a heliport to get to this 200-acre estate located in a secluded corner of Quebec's eastern townships. There are several houses on this site, the main one being built in 1927. Another building is described as a "three-season chalet" and is located next to the 120-foot dock on Lake Mephramagog. The property features multiple garages, including a 40-foot-long one. The whole place is so ritzy that a barn on the property was declared a historical site. Source: <a href="http://passerelle.centris.ca/Redirect2.aspx?CodeDest=JMONTANARO&NoMls=MT10764029&Source=WWW.REALTOR.CA&Langue=E">Centris</a>

  • Quebec: $18.9 Million

    The realtor selling this property suggests you may want to build a heliport to get to this 200-acre estate located in a secluded corner of Quebec's eastern townships. There are several houses on this site, the main one being built in 1927. Another building is described as a "three-season chalet" and is located next to the 120-foot dock on Lake Mephramagog. The property features multiple garages, including a 40-foot-long one. The whole place is so ritzy that a barn on the property was declared a historical site. Source: <a href="http://passerelle.centris.ca/Redirect2.aspx?CodeDest=JMONTANARO&NoMls=MT10764029&Source=WWW.REALTOR.CA&Langue=E">Centris</a>

  • Quebec: $18.9 Million

    The realtor selling this property suggests you may want to build a heliport to get to this 200-acre estate located in a secluded corner of Quebec's eastern townships. There are several houses on this site, the main one being built in 1927. Another building is described as a "three-season chalet" and is located next to the 120-foot dock on Lake Mephramagog. The property features multiple garages, including a 40-foot-long one. The whole place is so ritzy that a barn on the property was declared a historical site. Source: <a href="http://passerelle.centris.ca/Redirect2.aspx?CodeDest=JMONTANARO&NoMls=MT10764029&Source=WWW.REALTOR.CA&Langue=E">Centris</a>

  • Ontario: $17.9 Million

    This six-bedroom house sits on the shores of Lake Ontario in Oakville, near Toronto. Situated on 3.2 acres, it has 185 feet of waterfront and a boat house. The property features a triple car garage, a foyer of Italian limestone and a two-story living room. Security cameras can be controlled by way of a security panel. And the view from the back-yard pool can't be beat. Source: <a href="http://www.remaxaboutowne.com/">Re/Max Aboutowne</a>

  • Ontario: $17.9 Million

    This six-bedroom house sits on the shores of Lake Ontario in Oakville, near Toronto. Situated on 3.2 acres, it has 185 feet of waterfront and a boat house. The property features a triple car garage, a foyer of Italian limestone and a two-story living room. Security cameras can be controlled by way of a security panel. And the view from the back-yard pool can't be beat. Source: <a href="http://www.remaxaboutowne.com/">Re/Max Aboutowne</a>

  • Ontario: $17.9 Million

    This six-bedroom house sits on the shores of Lake Ontario in Oakville, near Toronto. Situated on 3.2 acres, it has 185 feet of waterfront and a boat house. The property features a triple car garage, a foyer of Italian limestone and a two-story living room. Security cameras can be controlled by way of a security panel. And the view from the back-yard pool can't be beat. Source: <a href="http://www.remaxaboutowne.com/">Re/Max Aboutowne</a>

  • Manitoba: $2.9 Million

    That this 6,000-square-foot house is listed at $2.9 million is a testament to the (relative) affordability of Winnipeg real estate. "On entry you are greeted by an impressive foyer, soaring ceilings, curved staircase and grand principal rooms that are perfectly suited to entertaining," the realtor fawns. The four-bedroom house features an office and a media room, among many other amenities. Source: <a href="http://agents.royallepage.ca/winnipeg">Royal LePage Dynamic</a>

  • Manitoba: $2.9 Million

    That this 6,000-square-foot house is listed at $2.9 million is a testament to the (relative) affordability of Winnipeg real estate. "On entry you are greeted by an impressive foyer, soaring ceilings, curved staircase and grand principal rooms that are perfectly suited to entertaining," the realtor fawns. The four-bedroom house features an office and a media room, among many other amenities. Source: <a href="http://agents.royallepage.ca/winnipeg">Royal LePage Dynamic</a>

  • Manitoba: $2.9 Million

    That this 6,000-square-foot house is listed at $2.9 million is a testament to the (relative) affordability of Winnipeg real estate. "On entry you are greeted by an impressive foyer, soaring ceilings, curved staircase and grand principal rooms that are perfectly suited to entertaining," the realtor fawns. The four-bedroom house features an office and a media room, among many other amenities. Source: <a href="http://agents.royallepage.ca/winnipeg">Royal LePage Dynamic</a>

  • Manitoba: $2.9 Million

    That this 6,000-square-foot house is listed at $2.9 million is a testament to the (relative) affordability of Winnipeg real estate. "On entry you are greeted by an impressive foyer, soaring ceilings, curved staircase and grand principal rooms that are perfectly suited to entertaining," the realtor fawns. The four-bedroom house features an office and a media room, among many other amenities. Source: <a href="http://agents.royallepage.ca/winnipeg">Royal LePage Dynamic</a>

  • Saskatchewan: $2.7 Million

    Four bedrooms, seven bathrooms and three outdoor decks feature in this 4,600-square-foot home in Saskatoon. The coolest feature in this house may be the split staircase to second floor. The basement media room features an ornate bar and a huge projection screen. Source: <a href="http://www.suttonsaskatoon.com/">Sutton Group Saskatoon</a>

  • Saskatchewan: $2.7 Million

    Four bedrooms, seven bathrooms and three outdoor decks feature in this 4,600-square-foot home in Saskatoon. The coolest feature in this house may be the split staircase to second floor. The basement media room features an ornate bar and a huge projection screen. Source: <a href="http://www.suttonsaskatoon.com/">Sutton Group Saskatoon</a>

  • Saskatchewan: $2.7 Million

    Four bedrooms, seven bathrooms and three outdoor decks feature in this 4,600-square-foot home in Saskatoon. The coolest feature in this house may be the split staircase to second floor. The basement media room features an ornate bar and a huge projection screen. Source: <a href="http://www.suttonsaskatoon.com/">Sutton Group Saskatoon</a>

  • Saskatchewan: $2.7 Million

    Four bedrooms, seven bathrooms and three outdoor decks feature in this 4,600-square-foot home in Saskatoon. The coolest feature in this house may be the split staircase to second floor. The basement media room features an ornate bar and a huge projection screen. Source: <a href="http://www.suttonsaskatoon.com/">Sutton Group Saskatoon</a>

  • Alberta: $12.7 Million

    This house, featured in Architectural Digest, sits in beautiful Canmore, on the edge of the Rockies, and has six bedrooms and 10 baths. The property features multiple "outdoor living rooms" (think ornate decks) to enjoy the view. For those into medieval intrigue, there is a hidden staircase running to the underground wine cellar. Source: <a href="http://www.rlfoothills.com/">Royal LePage Foothills</a>

  • Alberta: $12.7 Million

    This house, featured in Architectural Digest, sits in beautiful Canmore, on the edge of the Rockies, and has six bedrooms and 10 baths. The property features multiple "outdoor living rooms" (think ornate decks) to enjoy the view. For those into medieval intrigue, there is a hidden staircase running to the underground wine cellar. Source: <a href="http://www.rlfoothills.com/">Royal LePage Foothills</a>

  • Alberta: $12.7 Million

    This house, featured in Architectural Digest, sits in beautiful Canmore, on the edge of the Rockies, and has six bedrooms and 10 baths. The property features multiple "outdoor living rooms" (think ornate decks) to enjoy the view. For those into medieval intrigue, there is a hidden staircase running to the underground wine cellar. Source: <a href="http://www.rlfoothills.com/">Royal LePage Foothills</a>

  • British Columbia: $34 Million

    The most expensive house in Canada's priciest (and fastest-falling) real estate market features four bedrooms and six baths on 8,500 square feet, as well as a very cool boat house. But in a sign of the weakening of Vancouver's housing market, this property in ritzy West Vancouver has been on the market for some time — it featured as the most expensive house for sale in all of Canada the last time we put together this survey, in June 2012. Source: <a href="http://www.angellhasman.ca/">Angell Hasman Realty</a>

  • British Columbia: $34 Million

    The most expensive house in Canada's priciest (and fastest-falling) real estate market features four bedrooms and six baths on 8,500 square feet, as well as a very cool boat house. But in a sign of the weakening of Vancouver's housing market, this property in ritzy West Vancouver has been on the market for some time — it featured as the most expensive house for sale in all of Canada the last time we put together this survey, in June 2012. Source: <a href="http://www.angellhasman.ca/">Angell Hasman Realty</a>

  • British Columbia: $34 Million

    The most expensive house in Canada's priciest (and fastest-falling) real estate market features four bedrooms and six baths on 8,500 square feet, as well as a very cool boat house. But in a sign of the weakening of Vancouver's housing market, this property in ritzy West Vancouver has been on the market for some time — it featured as the most expensive house for sale in all of Canada the last time we put together this survey, in June 2012. Source: <a href="http://www.angellhasman.ca/">Angell Hasman Realty</a>


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  • 8 [tie]: Richmond, British Columbia - 12 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: The Canadian Press

  • 8 [tie]: Ottawa, Ontario - 12 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Alamy

  • 8 [tie]: Boston, Massachusetts - 12 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Alamy

  • 7: Miami, Florida - 13 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Shutterstock

  • 6: Calgary, Alberta - 13 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Alamy

  • 5: Chicago, Illinois - 17 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Shutterstock

  • 4: Montreal, Quebec - 20 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Alamy

  • 3: Vancouver, British Columbia - 21 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Alamy

  • 2: New York City - 72 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: Shutterstock

  • 1: Toronto - 147 highrises

    As of Oct. 2012. Source: <a href="http://www.emporis.com/">Emporis</a> Photo: The Canadian Press