Even though house prices were up just about everywhere in Canada in the fourth quarter, affordability declined only modestly.

"That is largely because of exceptionally low mortgage rates," Hogue said.

The Bank of Canada has pledged to keep its key overnight rate at 0.25 per cent, where it has been since last spring, until the end of the second quarter. But economists anticipate it will begin rising as early as July, which will further erode housing affordability.

But Hogue said, "We are of the opinion that the Bank of Canada will proceed gradually in interest rate hikes so as not to spook sectors including housing."

The Canadian Real Estate Association said 36,275 homes were sold across the country in February, up 44 per cent from the same month in 2009, when the recession was still having an impact on both consumer optimism and loan activity.

The RBC Economics report measures the proportion of pre-tax household income needed to service the costs of owning a home; the higher the measure, the more difficult it is to afford a home. For example, an affordability reading of 50 per cent means home ownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.

Nationally, the detached bungalow benchmark (the largest group) inched 0.3 per cent higher to 40.6 per cent, the standard townhouse rose by 0.2 percentage points to 32.9 per cent, the standard condominium climbed by 0.1 per cent up to 28 per cent and the standard two-storey home increased by 0.3 percentage points to 46.7 per cent.

In Manitoba, the affordability rate for a bungalow fell by 0.5 per cent to 35 per cent, a two-storey home was up 0.5 per cent to 38.8 per cent, townhouses were up 0.2 per cent to 28.8 per cent and condos were up 0.6 per cent to 21.5 per cent.

The index uses the bankers' rule of thumb that a maximum of 32 per cent of a person's pre-tax income is the ideal amount that should be spent on housing.

Despite some deterioration in affordability in Manitoba during the last quarter, levels remain in line with long-term averages. The RBC report suggests the price increases have not put undue stress on Manitoba households.

Finance Minister Jim Flaherty announced new mortgage-qualification rules last month to discourage homeowners from taking out mortgages on homes they might not be able to afford down the road when rates return to more normal levels.

To qualify for an insured mortgage, borrowers will have to meet the standards for a five-year, fixed-rate mortgage, even if the period they choose is shorter and the interest rate they pay is lower.