Home Affordability Only Improved in 1 Out of 10 Provinces in July: What It Means for Buyers

Let’s not sugarcoat it — July was another tough month for home affordability in Canada. Despite some good news in home prices cooling off in certain provinces, the relief was mostly cancelled out by soaring interest rates. In fact, based on the latest data, only one province out of ten saw an actual improvement in affordability.

Yes, home prices dipped in seven provinces, but higher interest rates meant that buyers still needed more income almost everywhere. In other words, even if the house got cheaper, the mortgage didn’t.

So what exactly happened in July? And what does this mean for your homebuying plans? Let’s dig into the data.

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What the July Market Looked Like

According to the Canadian Real Estate Association (CREA) report from August 15, the market started to show signs of settling down after months of volatility. With more listings and sales slowing slightly, the housing market is beginning to balance out.

Here’s what CREA reported:

• Home sales dipped by 0.7% from June, which is typical for summer.
• But compared to July 2022, total sales actually rose by 8.7%, signaling that buyers are coming back.
• The average home price across Canada sat at $668,754, up 6.3% from July last year.
• CREA’s Aggregate Composite Home Price Index (HPI) rose 1.1% month-over-month — a moderate gain, but smaller than April, May, or June.

These numbers sound encouraging on the surface, but once you zoom in on what it means for affordability, things get a bit more complicated.

“Home affordability worsened across most provinces in July — but as we break down in our full report, only one out of ten provinces actually saw an improvement, revealing just how widespread the pressure on buyers has become.”

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The Hidden Cost of Higher Interest Rates

The main story behind July’s affordability crunch is the Bank of Canada’s rate hike on July 12, which pushed the prime rate to 7.20%. Mortgage lenders followed suit, with the best 5-year fixed rate rising to 5.24%, up from 4.34% the year before.

So what does that mean in real-world terms?

Even though home prices dropped in several provinces, the cost to borrow went up — and that’s what actually determines how much home you can afford. That’s why only one province — British Columbia — saw any actual improvement in affordability.
Let’s take a closer look.

Where Did Affordability Improve?

Surprisingly, British Columbia — one of Canada’s most expensive housing markets — was the only province where the income needed to buy a home actually fell.

That’s because the average home price in BC dropped by $17,800, which translated into a $12,003 decrease in income required to qualify for a mortgage. As of July, the average buyer needed $204,569 to buy a home in the province.

It’s still high — the highest in the country — but at least it’s moving in the right direction.

The Rest of the Country? Not So Lucky

Here’s how things looked elsewhere:

• In Prince Edward Island, the average home price fell by $9,500, but the income needed still went up by $2,945. Why? Because interest rates added more to monthly payments than the price drop could offset.
• In Quebec, prices dipped slightly — about 1.03% — but buyers needed $101,477, up from $94,354 a year ago.
• Ontario saw a $6,000 drop in average home price to $920,000, but the income needed still climbed to $190,541.
• Even in provinces like Newfoundland & Labrador and Nova Scotia, where prices are more modest, higher rates meant income requirements rose.

The takeaway? Lower home prices alone aren’t enough anymore — not when interest rates are eating up your budget.

Where You Can Still Buy With Under $100K Income

Despite rising costs, there are still six provinces where the average home can be bought with a household income under $100,000:

• Newfoundland & Labrador – $61,534
• Saskatchewan – $73,172
• New Brunswick – $73,655
• Prince Edward Island – $82,032
• Nova Scotia – $84,992
• Manitoba – $94,660

These numbers reflect the minimum income required to qualify for a mortgage, assuming a standard 20% down payment and current interest rates. It’s tight, but still within reach for many Canadians — especially those looking outside the major cities.

Where You’ll Need Six Figures (or More)

On the flip side, four provinces now require a household income above $100,000 to afford a typical home:

• British Columbia – $204,569
• Ontario – $190,541
• Alberta – $102,053
• Quebec – $101,477

These numbers underscore how regional affordability gaps are widening. If you’re house hunting in Vancouver, Toronto, or even Montreal, you’re dealing with an entirely different affordability landscape than someone shopping in St. John’s or Regina.

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What’s Holding Buyers Back?

As nesto’s Principal Broker Chase Belair put it:

“Higher qualifying rates are actually canceling out the affordability gains we should be getting from falling property values.”

Translation: Even if prices cool off, as long as stress test rates remain high, many buyers simply can’t qualify for the mortgage they need — unless they earn a lot more money or have a huge down payment.

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So… Will Things Get Better?

In the short term? Probably not.

It’s becoming increasingly clear that interest rates will remain high through the rest of 2023, and possibly into early 2024. Unless the Bank of Canada pivots or inflation drops significantly, we’re unlikely to see meaningful rate cuts soon.

That said, there are signs of balance in the housing market:

• Price growth is slowing
• Inventory is rising
• More listings are coming back onto the market

All of this points to a more buyer-friendly environment by the end of the year — if you’re financially ready to move when the time comes.

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What Should Buyers Do Right Now?

If you’re sitting on the sidelines, now’s the time to get prepared — even if you’re not ready to make an offer just yet.

Here’s what we recommend:

• Use our [Mortgage Income Calculator – placeholder] to run the numbers based on your salary and location
• Get a mortgage pre-approval to lock in your rate and buying power
• Watch for price dips in your target neighbourhood
• Explore less competitive markets if you’re flexible with location

Remember: The best time to buy is when you’re financially ready, not when the headlines tell you to.

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Final Thoughts: Stay Ready, Not Rushed

July reminded us that affordability isn’t just about home prices — it’s about the full financial picture, including interest rates, taxes, and qualification rules.

With no major rate cuts expected this year, income affordability will remain under pressure. But if you stay informed, plan smart, and act fast when the timing’s right, your window of opportunity could open sooner than you think.

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