Three months ago, when the COVID pandemic hit, it became less affordable to own a home in Canada, with rising housing costs in Ontario off-setting prices in the surrounding areas. However, a new report from RBC suggests that housing affordability in the country could improve in the months to come thanks to lower home prices and low-interest rates.

Though, there is the risk of household income declining once government support programs end, which could partly offset gains in affordability.

In the months leading up to the COVID pandemic, Canada’s housing market was heating up, alluding to a strong spring season in markets from coast to coast. However, as stay-at-home orders came into effect, sending some buyers and sellers to the sidelines, it became less affordable to own a home, and RBC economist Robert Hogue says the national aggregate affordability measure deteriorated, albeit just slightly, for a second-straight time in the first quarter of 2020.

“That share for a composite of all housing types (RBC’s aggregate affordability measure) inched 0.2 percentage points higher to 50.2%,” reads the report.

READ: CMHC Forecasting Market Won’t Return to Pre-COVID Levels Until 2022

Hogue says rising housing costs in Ontario, particularly in Ottawa, the Greater Toronto Area, and southern Ontario, were the main culprit, as rapidly growing demand and tight supply cranked up the heat in markets across the province in the first quarter.

As for the rest of the country, lower mortgage rates and rising income helped offset price appreciation in BC, Quebec, and most of Atlantic Canada, or amplified the affordability-boosting effect of declining prices in the Prairies. St. John’s, Saint John, Quebec City, and Regina.

However, Hogue says price trends throughout the country generally held up after all levels of the government declared states of health emergencies in mid-March – despite home resale activity plummeting 40% to 80% as supply fell in tandem.

Hogue says demand-supply conditions have been quite resilient in most local markets so far and that he expects conditions will loosen more in the coming months as economic hardship causes potential buyers, especially first-time buyers, to delay their purchasing plans, and financially-strained owners, including investors, sell their properties once government support programs run out.

“We believe the scale will tip in favour of buyers in many markets across Canada and (benchmark) prices will fall modestly, possibly as early as this summer,” says Hogue. Additionally, historically low-interest rates will help drive down homeownership costs.

However, the extent of how much housing affordability will improve will depend on households’ ability to maintain their income, says Hogue.

“While the scope for such is limited near-term, we see the outlook brightening somewhat later this year as the economic recovery further progresses,” says Hogue.