The affordability gap in housing across Canada is showing significant improvement, according to the latest report from Ottawa’s Parliamentary Budget Officer (PBO). Interim PBO Jason Jacques released an updated housing report, revealing that the affordability gap has decreased from 80% in September 2023 to 34% in August. This positive trend is attributed to factors such as lower home prices, stronger wages, and cheaper borrowing costs, making it easier for Canadians to purchase homes and manage mortgage payments.
During the pandemic recovery period in 2022, home prices surged but later stabilized in many regions as the Bank of Canada raised its benchmark interest rate above five percent. Currently, with the policy rate at 2.5% after a series of cuts, mortgage expenses have decreased, although home prices have not fully rebounded to previous levels. The report highlights that Canada’s priciest markets, including Toronto and Hamilton, have experienced the most significant improvements in affordability, despite still being unaffordable for many buyers.
Notably, Halifax has the widest affordability gap at 74%, while Edmonton boasts the smallest gap at four percent among major metropolitan areas analyzed. Calgary, Montreal, and Quebec City have seen affordability deteriorate, yet mortgage carrying costs remain relatively low in these cities. The report also assesses households’ financial stability based on mortgage debt service ratios, indicating that progress has been made in restoring housing affordability to 2019 levels in the first half of 2025.
Although Toronto, Vancouver, and Victoria have shown improved ratios, households in these expensive markets are deemed more financially at risk compared to those in other parts of Canada. Overall, the PBO report underscores the varied landscape of housing affordability across the country, with some regions making strides while others still face challenges.
