Houses in Canada have become much more afford­able in the past three months, says a report yesterday from the Royal Bank with the bank’s housing affordability index making one of the biggest quarterly improvements on record.

“This has opened the door more widely to new buyers and set the stage for a resale market rally this spring,” said RBC senior economist Robert Hogue.

“While it is still too early to wave the all-clear sign — economic uncertainty has yet to dissipate in the region — it appears the Toronto housing market is averting the painful crash scenario,” he said.

The biggest reason: Low interest rates. Following a dismal drop to a 10-year low during the fall and winter, resale activity has bounced back this year, as buyers, particularly first-time buyers, have flocked to the market, lured by low monthly payments.

In the Toronto market, said RBC, it took on average 45.9 per cent of pre-tax household income to afford a $417,000 bungalow in the first quarter of this year, down from 51.4 per cent in the fourth quarter of 2008. The lower the measure, the easier it is to afford a home.

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