Owning a home in Ottawa became slightly more affordable in the first quarter of 2015, according to a report by RBC Economics released Monday.
"The improvement in the Ottawa area's housing affordability came amid stagnating home prices in the early months of 2015, as demand-supply conditions continued to weaken," Craig Wright, RBC's senior vice-president and chief economist, said in a statement.
The report found condominium and single-family home resales fell in the first quarter while new listings increased, thanks to a greater level of condo completions in the last year.
RBC said there are signs positive demand momentum is building as home resales have been ahead of year-ago levels for three straight quarters. It said recent data suggests this trend will continue in the second quarter.
"Ottawa's plentiful condo supply will likely continue to be a key factor weighing on prices in the near term," Mr. Wright said.
Across the country RBC says housing affordability continued to decline in Toronto and Vancouver, while conditions for homebuyers improved in Alberta during the first quarter of the year as lower oil prices caused the real estate market to soften.
RBC says mortgage rate cuts improved the affordability of homes in many Canadian housing markets where prices didn't accelerate too rapidly.
That offset rapid price growth in Toronto and Vancouver, leaving national affordability levels relatively flat.
The RBC Housing Affordability study measures the proportion of household income that is needed to service the costs of owning a home at current market values.
On a national level, RBC says affordability edged 0.3 percentage points lower for condos to 27.1 per cent, while for detached homes it declined 0.2 percentage points to 47.9 per cent.
The bank predicts that rate hikes from the central bank, which is expected to raise its trend-setting overnight interest rate next year, are likely to erode affordability.
"Exceptionally low interest rates have been a key factor keeping housing affordability levels in a largely manageable state in recent years," Mr. Wright said.
"The knock-on effect of the anticipated rise in rates would be most visible in high-priced markets."
-with files from the Canadian Press