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Housing affordability eroding, study says

The rebound in Canada's housing market has been so sharp that affordability is eroding, a new study say.

The Desjardins Affordability Index, reported quarterly by Desjardins Economic Studies, dipped below its historic average in the third quarter, meaning houses were less affordable to purchase, after a little more than a year in affordable territory. The average property price hit a new high of $328,762, a gain of 7.1 per cent from the second quarter.

"The improved economic outlook and low mortgage rates have fuelled a strong comeback by buyers. The number of sales has taken back all of the ground lost during the recession, driving prices higher," the Desjardins report said.

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Still, prices varied wildly from coast to coast in the third quarter:

- In Ontario "the nascent economic recovery ... has driven up demand for homes. The average home price hit an unmatched peak in the third quarter ($324,873) thanks to sharp growth in Toronto. Affordability thus deteriorated in the province, going to its historic average. The crisis has still left its mark; Ontarians' average disposable income has fallen substantially, going from $79,299 a year ago to $77,601 in the third quarter of 2009."

- Affordability in Quebec slipped, as a shortage of housing has driven prices higher.

- Calgary became more affordable, for the first time since 2005 as prices fell 2 per cent.

- Vancouver is "by the far the country's most expensive market, with an average home price of $603,165 in the third quarter. From the second to third quarters, the market saw prices explode, rising an average of $92,499."

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