OTTAWA — Home ownership costs in Canada rose for the third straight quarter in early 2010, and those costs are going to get higher as interest rates rise this year, according a housing report released Tuesday by RBC Economics Research.

The RBC Housing Affordability measure, which identifies how much pre-tax household income is needed to own a home, rose nationally across all housing types in the first quarter of 2010.

The detached bungalow benchmark measure rose by 0.9 of a percentage point to 41.1 per cent, the standard townhouse inched up by 0.4 of a percentage point to 33 per cent, the standard condominium climbed by 0.5 of a percentage point up to 28.2 per cent and the standard two-storey home increased by 0.6 percentage points to 46.8 per cent.

Robert Hogue, senior economist at RBC said in the report that although home ownership became more costly in the first quarter of 2010, affordability is still below peak levels reached in early 2008 and is not expected to exceed those peaks.

"We expect affordability to deteriorate throughout 2010 and 2011, but this should be limited as more balanced supply and demand conditions will take much of the steam out of the housing market," he said.

The main factor for the rise in home prices over the next year will be from the expected rise in interest rates, "as the Bank of Canada moves towards raising the current exceptionally low rates to more normal levels through the second half of this year and in 2011," according to the report. Bank of Canada Governor Mark Carney is widely expected to begin slowly raising interest rates as early as June 1, leading up to an overnight rate of 1.5 per cent by the end of the year.

"We believe that the spectacular rally in housing prices over the past year will soon end, as rock-bottom mortgage rates increase," wrote Hogue, adding that the improving economy and rising incomes should keep home affordability in check.

With the exception of Alberta, home affordability measures deteriorated across all provinces. The affordability measure for a detached bungalow in Canada's largest cities is as follows: Vancouver 73.4 per cent (up 4.8 percentage points over the last quarter), Toronto 49.1 per cent (up 0.4 of a percentage point), Ottawa 40.3 per cent (up 0.3 of a percentage point), Montreal 39.7 per cent (up 0.9 of a percentage point), Calgary 36.5 per cent (down 0.3 of a percentage point) and Edmonton 32.0 (down 0.5 of a percentage point).