Title: Home Affordability Improves in Canada, Report Shows

OTTAWA - A recent report from Ottawa's fiscal watchdog indicates a notable improvement in housing affordability across Canada, although conditions vary significantly by region. The Interim Parliamentary Budget Officer (PBO), Jason Jacques, released the updated housing report on Thursday, which assesses affordability by comparing average home prices to what typical households can afford.

The report reveals that the affordability gap has decreased from 80 percent in September 2023 to 34 percent in August 2025. This change is attributed to lower borrowing costs, increased wages, and a decline in home prices.

Home prices reached their peak in 2022 during the pandemic recovery but have since cooled in many areas following a series of interest rate hikes by the Bank of Canada. The central bank's recent cuts to its policy rate, now at 2.5 percent, have contributed to reduced mortgage costs. Despite these improvements, home prices have not returned to their previous highs.

The most significant gains in affordability were observed in Toronto and Hamilton. However, the PBO cautioned that home prices in these cities remain above affordable levels. In contrast, Halifax has the widest affordability gap at 74 percent, while Edmonton has the smallest gap at just 4 percent among major metropolitan areas analyzed.

Calgary, Montreal, and Quebec City experienced the most significant deterioration in affordability. Nevertheless, the PBO noted that the cost of carrying a mortgage in these cities remains relatively low. The report also examined households' financial stability through mortgage debt service ratios, which measure the portion of household income dedicated to home loan payments.

According to the PBO, the first half of 2025 has shown "significant progress" in restoring housing affordability to levels seen in 2019, based on these mortgage debt service ratios. While improvements have been noted in Toronto, Vancouver, and Victoria, the PBO warned that households in these expensive markets face greater financial vulnerability compared to those in other regions of Canada.