Interim Parliamentary Budget Officer (PBO) Jason Jacques has released an updated report on housing affordability in Canada, showing significant improvements in narrowing the affordability gap nationwide. The report indicates a reduction in the gap from 80 percent in September 2023 to 34 percent in August.
Factors contributing to this improvement include lower home prices, stronger wages, and reduced borrowing costs, making homeownership more accessible for Canadians. The Bank of Canada’s benchmark interest rate cuts have played a key role in lowering mortgage expenses, with current rates at 2.5 percent.
Although home prices surged in 2022 during the post-pandemic recovery, many markets have since stabilized, with prices not returning to previous highs. The most expensive markets, such as Toronto and Hamilton, have seen substantial gains in affordability, despite prices still exceeding affordable levels.
The report highlights varying affordability levels across different regions, with Halifax facing the widest affordability gap at 74 percent, while Edmonton boasts the smallest gap among major metropolitan areas at four percent. Calgary, Montreal, and Quebec City experienced a decline in affordability, although mortgage carrying costs remain relatively low in these cities.
Additionally, the report assesses households’ financial stability based on mortgage debt service ratios, which have shown progress towards restoring affordability to 2019 levels in the first half of 2025. While Toronto, Vancouver, and Victoria have improved in this aspect, households in these expensive markets are deemed more financially vulnerable compared to other regions in Canada.