The average monthly carrying cost of new home ownership continues to drop as persistent low interest rates have offset the rising price of homes, says a new report from BMO Financial Group’s Economists.

“Housing affordability is still at historically high levels across the Canadian market,” said Michael Gregory, assistant chief economist at BMO Financial Group. “The combination of low interest rates and continued strong labour markets has not only brought new buyers into the market, it has also spurred housing starts at an annualized clip not seen since 1990.”

The BMO report noted that the national average sale price for housing, during the three months ending in August, rose by 6.8 per cent to $187,059 from $175,083 during last year. However, despite the price increases, carrying costs fell 7.8 per cent to $936 a month from $1,015 last year.

Housing costs were calculated based on a 10 per cent down payment and monthly mortgage payments set at a variable interest rate.

The cost of carrying a mortgage on a new housing purchase has risen 7.3% since the Bank of Canada began raising interest rates in April. However, this rise still keeps the monthly cost of mortgages 15.4% below its peak in September 2000.

“There is nothing like a bout of double digit price hikes as witnessed over the past year or so to draw would-be sellers, developers and builders into the market and prop up supply,” said Gregory. “Nonetheless, on balance, we still consider this to a be a sellers market.”

The monthly carrying cost for newly purchased housing is highest in the Vancouver metropolitan area at $1,511 and lowest in Winnipeg where the average house can be carried for as low as $487 a month. The average price for housing in Toronto was $277,571 with an average monthly carrying cost of $1,389.