Owning a home in Canada for three years is not affordable, according to the economics of the Royal Bank of Canada (RBC).
Its latest national affordability measures fell to 55.1% in the first quarter of 2025, down from 60.7% a year ago. This improvement is driven by lower interest rates, small amounts of falling house prices and steady growth in household income.
“In general, improvements in trends are likely to be maintained,” said Robert Hogue, assistant economist at Royal Bank of Canada (RBC). “We see earlier lowering of interest rates continues to have a favorable impact on affordability, and prices in some markets have further helped the process.”
But while conditions are improving, affordability remains far from pre-pandemic levels. “In the past five quarters, steady improvements have reversed only one-third of the national affordability loss,” Hogg said. “In many major markets, buying conditions remain extremely challenging.”
He added that apartment buyers have seen the biggest improvement. “In certain parts of the country, including Edmonton, Saskatoon, Regina, Winnipeg and even Toronto – the apartment affordability measures are now effectively back to their pre-pandemic locations.”
Toronto Vancouver remains an affordable market
Even with some improvements, owning a typical home in Vancouver still requires 92.7% of the family income. Toronto accounted for 68.3%, followed by Montreal’s 49.5%.
Calgary (42.3%), Ottawa (44.3%) and Edmonton (33.0%) remain the more affordable large markets.
“The price drop also accelerates the increased affordability of apartments in Vancouver and Victoria, namely the other two most expensive markets in Canada, although these two markets still have more of a loss-making basis for recovery,” Hogg said.
Royal Bank of Canada is expected to ease further
“We believe lowering interest rates, further price declines in certain markets, and ongoing revenue gains will reverse about half of the RCMP’s integrated affordability measures during the pandemic by the end of the year,” Hogue added.
However, the bank warned, “Any further progress will become trickier once interest rates stabilize, as future improvements will be entirely dependent on house prices and household income.
“In many parts of the country, affordability will remain a huge problem and it is the main obstacle to recovery,” Hogg concluded.
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Last modified: July 3, 2025
