According to the latest Housing Trends and Affordability Report from RBC Economics, Canada’s housing affordability slightly improved by the end of 2013. But as 2014 continues, RBC expects that the costs of home ownership will gradually outpace household incomes, putting pressure on affordability. However, a sustained balance between supply and demand will mean only modest price increases.

After two consecutive quarters of deterioration, household incomes outpaced mortgage costs near the end of 2013, contributing to an increase in affordability throughout the country.

“The relative strength in income gains in Canada offset the minor increase in homeownership costs in the final months of 2013, meaning that homes were more affordable for those looking to buy,” says Craig Wright, senior vice-president and chief economist at RBC.

Affordability is determined using the RBC housing affordability measure, which is based on the calculated costs of owning, at market value, a detached bungalow, standard two-storey home or standard condominium apartment. The measure for standard condominiums fell just 0.1 per cent to 28 per cent in the fourth quarter of 2013.