The cost of owning your own home has risen for the third straight quarter, with houses becoming less affordable in all provinces except Alberta, according to a report by RBC.
The bank said it expects affordability to continue to decline throughout this year and next as interest rates begin to rise.
RBC's Housing Affordability Index measures the amount of pre-tax income needed to service the cost of owning a home.
In the first quarter, the cost of owning a detached bungalow increased by 0.9 percentage point to 41.1%, a standard two storey home rose 0.6 of a point to 46.8% and the cost of a standard condominium was up by half a point to 28.2%.
The biggest declines in affordability were in British Colombia, Saskatchewan and Manitoba, with the index in Vancouver rising 4.8 points to 73.4% from the previous quarter.
Affordability levels in B.C. are now close to their all-time peak hit in 2008, and that may weigh on the housing market in the province in the short term, RBC said.
Affordability also dropped in Quebec, Ontario and Atlantic Canada but at a more moderate pace, it said. In Toronto, the index rose 0.4 of a point to 49.1% and in Montreal the gain was 0.9 to 39.7%.
Although affordability will decline, it's unlikely to return to peak levels seen prior to the recession in 2008, RBC said.
"We believe that the spectacular rally in housing prices over the past year will soon end, as rock-bottom mortgage rates increase," said RBC senior economist Robert Hogue. "Sustained economic growth over the next year and the ensuing rise in job creation and household income should keep home affordability from spiraling out of control."
The Bank of Canada is expected to raise rates from historic lows as early as next month to stop inflation from spiraling out of control. The central bank predicts the feverish levels of activity in the property market will slow in the second half as rates rise and the balance between supply of houses and demand returns.