National ownership costs eased again, but the relief looks fragile and uneven
Housing affordability in Canada technically improved by late 2025, but for many borrowers, the worst still lies ahead.
A new analysis from Robert Hogue, assistant chief economist at Royal Bank of Canada, showed ownership costs edging lower nationwide even as pressure mounted in key regional markets.
RBC’s national aggregate affordability measure, which tracked the share of median pre‑tax household income needed to carry ownership costs, eased for an eighth straight quarter to 52.4% in Q4 2025. That's down from a peak of 63% at the end of 2023.
A lower reading signalled better affordability. Yet the pace of progress has clearly faded, with quarterly declines slowing to 0.4 percentage points in the second half of 2025 from an average 1.6 points over the prior 18 months.
“Housing affordability continues to improve in Canada. RBC’s national aggregate affordability measure eased for an eighth consecutive quarter to 52.4% in Q4 2025 from an all‑time high of 63% at the end of 2023. A fall in the measure represents an increase in affordability,” Hogue said.
TD Economics has slashed its 2026 forecast, now projecting national home sales to fall 1.8% and prices to edge 0.3% lower—downgrades led by Ontario and British Columbia, while Prairies and oil‑producing regions show rare resilience.https://t.co/rEppCHjPpN
— Canadian Mortgage Professional Magazine (@CMPmagazine) March 31, 2026
Regional strains mounted even as costs eased
The national picture masked regional contrasts. “What was nearly an across the board improvement in affordability conditions in 2024 has become sparser in Canada,” Hogue said, pointing to markets where tight supply kept prices firm.
“Winnipeg, Montreal, Quebec City and St. John’s are prime examples. In these markets, affordability ceased to recover when interest rates stabilized in the fall,” he said.
In Montreal, RBC’s affordability measure climbed to 50.4%, near its worst level, while Quebec City’s ownership costs reached their highest point in more than three decades.
At the same time, corrections in the country’s priciest markets drove much of the national relief.
“Vancouver remains by far the least affordable market in Canada with a measure of 88.2%,” Hogue said, even after a 7.2‑point drop in a year.
In Toronto, he said, declines since early 2024 have offset “some 80% of the earlier spike” in ownership costs, yet buyers still needed 62.9% of income to carry an average home.
BoC stance, supply crunch limits further relief
Hogue’s outlook aligned with earlier RBC work that warned easing ownership costs would “get trickier once rates stabilize,” leaving further improvement dependent on home prices and income growth rather than cheaper debt.
With the Bank of Canada expected to hold its policy rate through 2026, he said “only price drops in certain markets and sustained household income growth can be counted on to lighten the ownership cost load.”
Hogue’s latest work added: “More varied outcomes will work to temper affordability gains in the year ahead,” he said, adding that Canada is “likely approaching the end of the recuperation phase for housing affordability.”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
