Homeownership in Canada just got even more out of reach. In August, the income needed to buy a typical home surged by 8.27% compared to the previous month — marking yet another blow to affordability. As housing prices remain high and borrowing costs stay elevated, many buyers are now finding themselves priced out, even with steady earnings.

One Thing Is Clear — August Borrowers Felt the Heat from the July 12th BoC Hike

In August, the full impact of the Bank of Canada’s July 12 rate hike finally set in. And it hit hard. According to the latest CREA report (released September 15), home affordability worsened across all provinces — not a single one was spared. The income needed to afford a home jumped nationally by 8.27% year-over-year.
The Bank of Canada’s quarter-point increase pushed the prime rate to 7.20%, raising borrowing costs just as summer’s usual market slowdown kicked in. But this wasn’t just seasonal. The numbers show something deeper.

CREA’s August Market Breakdown: Rising Prices, Lower Sales

Here’s what CREA reported:

Home sales fell 4.1% month-over-month (a typical late-summer trend).
But year-over-year, sales were up 5.3% — a sign the steep drop seen in 2022 is behind us.
Average home price across Canada was $750,100 — a 2.1% rise from August 2022, but lower than July’s $757,300.
New listings increased just 0.8% from July, indicating some sellers are still hesitant.

Shaun Cathcart, CREA’s Senior Economist, summed it up well: “The demand is obviously still there, and it will be back… for now, the slowdown on the buyer side should help keep a lid on prices.”

Home Affordability Worsened in All 10 Provinces

According to proprietary data from nesto, the average 5-year fixed mortgage rate rose to 5.34%, up from 4.34% in August 2022. That, combined with higher average home prices, pushed required household incomes higher across every single province.
In previous months, there was always at least one province where required income fell. But not this time. In August, every province saw a year-over-year increase in the income needed to afford a home. In many cases, this was due to home prices AND interest rates rising together, a double blow to affordability.
For example:

Quebec: Average home price jumped 8.74% to $471,800. Required income rose from $94,354 to $102,599.
Ontario: Home price up $9,300 to $908,000. Income needed surged from $174,002 to $189,489.
British Columbia: Price rose $10,200 year-over-year. Required income climbed from $188,527 to $205,492.

As Chase Belair, nesto’s Co-Founder & Principal Broker, noted: “Fixed mortgage rates above 5% were a big factor in January’s lowest post-pandemic national average sale price. We’re back above 5% now, so if rates don’t drop soon, home prices could trend downward again — creating new entry points for first-time buyers.”

6 Provinces Where You Can Still Buy a Home With Under $100K Salary (August 2023)

If you’re earning below $100,000 a year, here are the provinces where homeownership may still be within reach:

Newfoundland & Labrador: $63,055
Saskatchewan: $72,559
New Brunswick: $74,468
Prince Edward Island: $84,062
Nova Scotia: $85,752
Manitoba: $96,721

While affordability is slipping, these provinces still offer opportunities for middle-income earners looking to get on the property ladder.

4 Provinces Where You Now Need Over $100K to Buy a Home (August 2023)

For the remaining four provinces, six figures is now the benchmark:

British Columbia: $205,492
Ontario: $189,489
Alberta: $103,145
Quebec: $102,599

These figures factor in today’s interest rates, average home prices, and common debt ratios.

Final Thoughts & Predictions for Next Month

Affordability continues to worsen, but it’s not all bleak. Sales activity suggests buyers are still engaged, and prices haven’t spiked out of reach. If fixed rates remain elevated — or climb further — there’s a case for home prices to dip again in Q4 2023, offering new windows of opportunity.
As we look ahead to October’s CREA update, expect more of the same: sluggish but steady activity, small price bumps in some provinces, and ongoing affordability concerns.
But here’s the good news: with the right rate strategy and smart planning, buyers can still make it work. Tools like mortgage calculators, rate comparison platforms, and expert brokers are more valuable than ever.

Need help navigating this market?
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