The cost of owning a home in Canada increased slightly in the last three months of last year, a report by RBC Economics said Monday.

The report found home prices in general rose, partly offset by a small drop in mortgage rates and by higher wages.

Rising home prices were partly eased by low interest rates and higher wages. (CBC)

Senior economist Robert Hogue says while affordability deteriorated, the change was modest.

The RBC index looked at the proportion of pre-tax household income needed to service the costs of owning a home.

The trend applied across all housing segments.

The proportion of income needed for a detached bungalow rose 0.3 of a percentage point to 40.6 per cent and that for a standard townhouse rose by 0.2 of a point to 32.9 per cent. The proportion needed for a condo climbed up 0.1 of a percentage point to 28 per cent and for a two-storey home it increased by 0.3 of a point to 46.7 per cent.

The report said affordability deteriorated "significantly" in British Columbia — particularly for bungalows and townhouses — and Quebec. In Manitoba, most RBC measures rose moderately but there was a substantial improvement in Saskatchewan and, to a lesser extent, Alberta.

It became modestly easier to own a home in the Atlantic provinces, while in Ontario, affordability was either flat or eroded marginally.

Hogue predicted home ownerships costs will rise in future, as interest rates rise.

"The extent of the deterioration (in affordability) will depend on the speed at which rates will rise," he said.

"On that score, the pace of increase should be fairly steady throughout 2010 and 2011, helping to alleviate concerns of an imminent derailing of housing affordability in Canada," said Hogue.