The current economic decline has made housing more affordable in Canada, a study released by Royal Bank of Canada Economics said Thursday.

From mid-2004 to early 2008, the cost of home ownership consumed a greater and greater portion of family income, RBC said. That trend reversed, however, in the final three months of 2008 during the period that many economists say marked the beginning of what's become the deepest recession in decades.

RBC's affordability measure, which tracks the pre-tax household income needed to maintain a home, had seen sharp increases in costs from mid-2004 to early-2008. Over the last quarter of 2008, however, the affordability of maintaining a home has improved across all housing segments, according to the report.

The measure, which has existed since 1985, looks at the homeownership costs of certain types of homes compared against a household's monthly income. The costs examined include mortgage payments, utilities and property taxes.

During the fourth quarter of 2008, home ownership on a national level became 2.3 per cent to 3.5 per cent more affordable, according to the report.

Maintaining a detached bungalow — which RBC uses as a benchmark — cost about 43.7 per cent of a household income on a national level in the October to December 2008 period, the report found. That was a decrease of 2.1 percentage points from the previous quarter.

Meanwhile, the cost of maintaining a townhouse was 35.4 per cent of a household income, a standard condo was 30.1 per cent, and a two-storey home was 50 per cent.

Lending rates helping

The improvements were partially related to lower lending rates, the report said.

"Going forward, low mortgage rates and persisting downward pressure on housing prices will continue to help repair affordability although slowing income growth will act as a restraint," said Robert Hogue, a senior economist with RBC.

Maintaining a detached bungalow costs 70.3 per cent of a household's income in Vancouver, 51.3 per cent in Toronto, 42.7 per cent in Calgary, 42.7 per cent in Ottawa and 39.4 per cent in Montreal.

Housing affordability is at "worrisome levels" in Saskatchewan when compared with historic averages in the province, the report said.

Maintaining a bungalow in the province costs about 45.6 per cent of a household's monthly income, while a two-storey home costs about 47.6 per cent.

As housing prices begin to decline and market activity cools off in the booming province, if the economy ends up performing more weakly than expected, it could significantly affect Saskatchewan housing affordability, the report argues.

In British Columbia, housing appears to becoming more affordable, according to report.

Housing affordability in the province is improving due to downward pressure on British Columbia's housing markets, Hogue said.

Maintaining a bungalow in the province costs about 66 per cent of a household's income while a two-storey home costs about 73.7 per cent, the RBC found. The cost of homeownership in Vancouver is the highest in the country.

The affordability in Alberta has improved since mid-2007.

"Poor economic conditions [in the final quarter of 2008] have taken over as the key market driver, surpassing poor affordability, which had been largely behind the initial stages of the downturn," Hogue said.

Maintaining a bungalow in the province costs about 39.3 per cent of a household's income in Alberta while maintaining a two-storey home costs about 44 per cent, the report said.

Though affordability in the province hasn't returned to historic lows, the drop in oil and gas prices, cancellation of energy projects and rising unemployment has caused a market correction in Calgary and Edmonton that will resort "some degree of affordability in both cities," Hogue said.

With files from The Canadian Press