Key Takeaways
- Ownership costs in Canada have eased for the seventh consecutive quarter, with the national aggregate affordability measure improving to 53.2% in Q3 2025.
- The improvement in affordability is mainly concentrated in a few markets, including Vancouver and Toronto, where prices have been falling this year.
- Further gains in affordability are expected to be incremental, with the Bank of Canada likely to keep interest rates on hold through 2026.
- The pace of improvement in affordability is slowing down, with the latest gain being the slimmest this cycle.
- Some markets, such as Victoria and Vancouver, still have extremely challenging affordability conditions, with ownership costs representing nearly 68% of an average household’s income.
Introduction to Affordability Trends
Ownership costs in Canada have eased for the seventh consecutive quarter, with the national aggregate affordability measure improving to 53.2% in Q3 2025, down from an all-time high of 63.5% in 2023. This improvement is a result of a combination of factors, including steady mortgage rates and falling prices in certain markets. However, the pace of improvement is slowing down, with the latest gain being the slimmest this cycle, at just 0.4 percentage points. This is less than a quarter of the average 1.7 percentage point drop in the prior six quarters.
Market-by-Market Analysis
The improvement in affordability is mainly concentrated in a few markets, including Vancouver and Toronto, where prices have been falling this year. Victoria, Halifax, and Saint John also recorded better conditions in Q3, while all other markets saw little or slightly unfavorable changes. In Vancouver, falling prices have helped to turn around the city’s strained affordability picture, with ownership costs representing nearly 68% of an average household’s income. Toronto, on the other hand, is still struggling to get back in gear after the trade war derailed a budding recovery earlier this year, with ownership costs falling the most in Q3 among tracked markets.
Affordability Challenges
Despite the improvement in affordability, many prospective buyers remain hesitant due to the fact that they have yet to see a full reversal of the earlier massive loss of purchasing power. In fact, buyers in every corner of the country still find it less affordable to own a home today than before the pandemic. Vancouver and Victoria have deteriorated the most, with respective mortgage carrying costs continuing to be 24 percentage points and 19 percentage points higher than Q4 2019 as a share of household income. Other markets, such as Windsor, Halifax, Trois-Rivières, and Montreal, also have shares still up 13 to 15 percentage points.
Future Outlook
Further gains in affordability are expected to be incremental, with the Bank of Canada likely to keep interest rates on hold through 2026. This would leave only easing prices in certain markets and sustained household income growth to lighten the ownership cost load. However, the pace of improvement is expected to slow down, and the end of the recuperation phase may be near. In fact, it may have already been reached in parts of the country, with steady expected interest rates muting a significant source of ownership cost reduction.
Regional Market Trends
In terms of regional market trends, Calgary’s affordability is close to its long-run average, with the share of a household’s income needed to cover the cost of owning a home at 40.9%, just a touch higher than the long-run average of 39.2%. Edmonton, on the other hand, has lost the solid momentum it had last year, with resales down 5.4% so far this year. Saskatoon’s strong migration flows and manageable ownership expenses sustain steady buyer interest, while Regina remains among the hotter markets in the country, with resales hovering near record levels and home values on a solid upward trajectory.
Conclusion
In conclusion, while ownership costs in Canada have eased for the seventh consecutive quarter, the pace of improvement is slowing down, and the end of the recuperation phase may be near. The improvement in affordability is mainly concentrated in a few markets, and many prospective buyers remain hesitant due to the fact that they have yet to see a full reversal of the earlier massive loss of purchasing power. As the Bank of Canada is likely to keep interest rates on hold through 2026, further gains in affordability are expected to be incremental, with easing prices in certain markets and sustained household income growth being the main drivers of improvement.
