Home affordability in Canada improves for 10th consecutive quarter

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Canada’s housing market continues to trend toward better affordability, a new report has found. National Bank of Canada Capital Markets published its August Housing Affordability Monitor , finding affordability improved in the second quarter (April 1 to June 30) of this year.

It is the 10th consecutive quarter-over-quarter improvement for affordability in Canada’s real estate market.

Reduced mortgage costs factored into the improvement along with a 2.1 per cent drop in seasonally adjusted home prices over the first quarter of the year.

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That is despite the benchmark for a five-year term fixed mortgage rising seven basis points.

The rise in interest rates, however, was offset by a 0.7 per cent increase in median household income.

The report pointed to the mortgage payment as a percentage of income consequently falling 1.1 percentage points to 51.1 per cent. That is the lowest level for this metric in four years.

Six of 10 markets National Bank tracks saw improved affordability in the second quarter, led by Vancouver and Toronto.

Calgary ranked fourth for improving affordability, while Edmonton was among the four markets in the report that saw affordability decrease.

The roughly 2½-year trend of better affordability has “been substantial,” the report added.

Since reaching an all-time high in the fourth quarter of 2024, National Bank’s composite affordability index has fallen by about 11 percentage points, marking a significant improvement in affordability.

The report noted that falling interest rates accounted for about a five percentage points decline, while higher incomes made up about a four percentage points decrease.