The average price of a detached bungalow in Canada jumped more than 12 per cent in the year ended Sept. 30, the Royal Bank's economic department reported Wednesday.

Housing prices rose faster than incomes in the third quarter, RBC said, making the benchmark, 1,200-square-foot bungalow less affordable. But the rate at which housing prices are growing faster than incomes is slowing, so home ownership may be more manageable next year.

A typical bungalow averaged more than $276,000 in the third quarter, the Royal Bank says.
(Toby Talbot/Associated Press)

"In fact, after three consecutive quarters of sharp deteriorations in affordability, the pace slowed for all home classes in almost every region of the country," said Derek Holt, assistant chief economist. "Alberta's housing affordability was the lone exception, but it will probably join the rest of the country next year."

New home construction and resales are expected to slow down in 2007, which will ease the pressure on house prices, RBC said.

The bank calculated that in the third quarter, bungalows cost an average of $276,293 across the country, although the national figure hides a huge range of prices. Saskatchewan, Manitoba, the Atlantic region and Quebec were lower, while British Columbia and Alberta were above average.

Ontario was close to the average, but Toronto was far above the mark. Vancouver — at nearly $540,000 — was the priciest city.

The bank also calculated the annual income needed to carry a mortgage on a bungalow — nearly $68,000 nationally, ranging from $42,000 in the Atlantic region to $119,000 in Vancouver.

The bank also monitors prices for two-storey homes, condos and row houses, and compared the prices to incomes to develop an affordability index: the share of pre-tax household income needed to cover the costs of owning a home.

Ranked from cheapest to most expensive, the bank said the index is:

• 28 per cent for a standard condo (900 sq. ft.).
• 32 per cent for a standard townhouse (1,000 sq. ft.).
• 40.2 per cent for a detached bungalow (1,200 sq. ft.).
• 45.8 per cent for a standard two-storey (1,500 sq. ft.).

Calgary faces the biggest price pressure.

"While price growth in Toronto has been fairly gradual and sustained, the eye-popping speed of price growth in Calgary (reaching annual gains of 50 per cent to 60 per cent) has moved up so quickly that the current pace of price appreciation is simply unsustainable," the bank said.