Canada’s housing affordability recovery runs out of steam
“Upward pressure on long-term interest rates and likelihood of Bank of Canada hikes next year could put ownership costs on the rise again after dropping significantly since 2024,” the report said.
Income doing all the heavy lifting
Rising household income was the only driver of affordability improvement in Q2. The report noted that “rising household income accounted for the entire affordability gain in Canada in Q2 as home prices and rates held fairly steady.”
That’s a consistent pattern across most regions, reflecting firmer wage growth and government transfers including the one-time top-up of the Canada Groceries and Essentials Benefit distributed in June.
In British Columbia, a softening labour market weighed on worker pay, preventing buyers from fully capturing the benefit of still-declining home prices.
In Quebec and parts of Atlantic Canada, strong income growth was outpaced by solid property appreciation, eroding rather than restoring purchasing power.
