38% of Canadian homeowners feel that housing in their area is unaffordable, according to a new survey released by Manulife Bank of Canada.

According to the bi-annual survey, 28% of respondents found their local housing market "somewhat unaffordable", while another 11% described it as "not affordable at all”. 51% called housing in their area "somewhat affordable" and only one in ten felt housing in their area was "very affordable."

Perception of affordability varies by region, as 83% of homeowners in Canada's Atlantic provinces are most likely to feel housing is affordable, while 39% in British Columbia are least likely.

The survey also revealed that 46% of those in Canada's largest urban areas (Vancouver, Calgary, Edmonton, Toronto, and Montreal) are much less likely to describe their housing market as affordable than the 68% elsewhere in Canada. Perceived lack of housing affordability was most acute in Vancouver, where only 33% indicated housing was affordable.

Housing costs may be putting pressure on other aspects of homeowners' finances. While 73% of homeowners believe they're somewhat or completely prepared to deal with an unexpected household expense such as a major car repair or a furnace replacement, other results suggest this may not be the case. For example, 38% were "caught short" at least once in the past year - where they didn't have enough money in their bank accounts to cover expenses.

While 33% of those caught short were able to access a line of credit, and 23% had a rainy-day savings fund, 32% had to carry a balance on a high-interest credit card, while 14% had borrow money from a family member.

"The challenge faced by many Canadians is that their income is relatively stable from month-to-month, but their expenses can vary significantly," said Rick Lunny, President and Chief Executive Officer, Manulife Bank of Canada. "Access to rainy day savings or a low-cost line of credit are good options to safeguard against these fluctuations. However, if your backup plan is to carry high-interest credit card debt or borrow from a family member - you could be putting undue stress on your finances or relationships." The size of many Canadians' rainy-day accounts also suggests that they may be less prepared than they believe. Fewer than one in four (24 per cent) homeowners has more than $5,000 set aside for an emergency, and half indicate they either have "$1,000 or less", or don't know how much they have for emergencies.

"While it's always a good idea to have some cash savings available for emergencies, it doesn't necessarily make sense to have a large emergency fund if you also have debt," said Lunny. "In some cases you'd be better off using some of that money to pay down your debt and have a low-cost line of credit available for larger unexpected expenses."

While 56% of homeowners who work with a financial advisor have the same median household income ($85,000) as the 44% who don't, those with an advisor appear to be in better financial shape on a few fronts.  They're less likely to have increased their debt in the past year (17% vs. 22% of those with no advisor), more likely to feel somewhat or very prepared for an unexpected expense (80% vs. 65%) and have more "rainy day savings" (median of $4,500 vs. $2,000).

The survey also found that 63% of homeowners expect housing prices in their area to increase next year while only 7% expects them to decrease - although this finding varies significantly by region. In Alberta, Manitoba and Saskatchewan, almost 19% expect prices to decline in the next 12 months, while just 3% of homeowners in Ontario, 4% in British Columbia and 4% in Quebec expect price declines in the next year.

Nationally, 71% of Canadian homeowners between ages 20 and 59 have a mortgage, and report an average of $175,000 of mortgage debt. Regionally, Alberta ($238,000) and British Columbia ($228,000) reported the highest average mortgage debt, while Ontario ($167,000), Manitoba/Saskatchewan ($151,000), Atlantic Canada ($151,000) and Quebec ($141,000) reported much lower levels of mortgage debt.