Canada’s long‑awaited housing affordability relief has continued into the third quarter of 2025, but new analysis from RBC Economics suggested the recovery phase is nearly spent, leaving brokers to navigate a market still far more expensive than before the pandemic.
RBC’s national aggregate affordability measure stood at 53.2% in Q3, down from a peak of 63.5% in 2023, meaning the share of pre‑tax household income needed to carry ownership costs has fallen for seven straight quarters.
Yet the the measure declined by just 0.4 percentage points in Q3, compared with an average 1.7‑point drop in the prior six quarters, according to RBC.
“Series of interest rate cuts since mid‑2024 and falling prices in parts of the country have significantly lowered ownership costs in the past seven quarters,” RBC assistant chief economist Robert Hogue said in the report.
“But, they’ve only partly reversed the historic spike from soaring prices during the pandemic, and the central bank’s aggressive rate hike campaign to fight inflation.”
RBC said Vancouver and Toronto – where prices have been falling this year – accounted for most of the national improvement, with Victoria, Halifax and Saint John also seeing better conditions, while “all other markets we track saw little or slightly unfavourable changes.”
In Vancouver and Victoria, mortgage carrying costs still sat 24 and 19 percentage points above late‑2019 levels respectively.
Hogue warned that “we’re likely approaching the end of the recuperation phase” as the Bank of Canada’s rate‑cut cycle wound down and policy rates are expected to hold through 2026.
Further “meaningful advancement would require steeper price declines or more robust income increases – neither of which seem likely under our base case forecasts.”
Regional affordability divides also persisted. RBC’s latest figures showed Regina with the best affordability among tracked markets, at 26.4%, while Victoria and Vancouver remain near the top of the cost spectrum at roughly 68% of household income.
Toronto, despite recording the largest Q3 decline, still requires 64.9% of income to own a typical home – a level RBC said meant “only a small minority of households could afford owning a home.”
As Hogue previously said, improvements could maybe reverse half of the loss during the pandemic, but still not going to be back to what it was before the pandemic.
With rate relief largely priced in and income growth slowing, the next phase for the market looks set to be slower, more uneven, and heavily dependent on how local prices and supply adjust from here.
CMP
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