Home Affordability in Canada Took a Hit This August — Here’s What It Means for Buyers

Canadians hoping for some housing relief this summer were met with a tough reality in August: owning a home got even more expensive.
New data shows that, on average, you needed 8.27% more income this August than last year to qualify for a home purchase. And it wasn’t just one or two provinces driving the change — affordability dropped across all ten provinces.
So, what’s going on? And is there any hope on the horizon?
Let’s break it down.

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Key Takeaways

• A typical Canadian home now requires 8.27% more income than last year to afford.
• Average home prices rose to $750,100, even as interest rates stayed high.
• Six provinces still offer affordability under $100K income — but that number is shrinking.
• Fixed mortgage rates above 5% continue to erode purchasing power.
• Unless rates drop soon, affordability will remain a growing challenge this year.

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What Happened in August?

August marked the first full month of real estate data following the Bank of Canada’s July 12th rate hike, which pushed the prime rate to 7.20%.
Here’s what the latest CREA report (released Sept 15) tells us:

• Home sales dropped 4.1% from July (not unusual for late summer)
• Transactions were up 5.3% compared to August 2022 — a sign that last year’s market slump is behind us
• Average home prices hit $750,100, up 2.1% from a year ago
• New listings rose slightly by 0.8% from July

“The demand is obviously still there, and it will be back,” said Shaun Cathcart, Senior Economist at CREA. “But for now, the slowdown on the buyer side should help keep a lid on prices.”

In plain English? People still want to buy — but higher rates are forcing them to wait.

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Affordability Got Worse Everywhere in Canada

In past months, some provinces saw affordability hold steady or even improve slightly, especially if prices dipped. But this August?
All ten provinces saw an increase in the income needed to afford a home.
That’s because we’re now seeing the worst-case combo:

• Rising home prices
• Stubbornly high interest rates

For buyers, that means higher monthly payments, bigger income requirements, and shrinking purchasing power — even if home prices aren’t jumping dramatically.

“We’re back above 5% for fixed rates,” explains Chase Belair, Co-Founder of nesto. “That was the tipping point last January when home prices hit their post-pandemic lows. If rates stay this high, prices may soften again — giving buyers another shot.”

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August 2023: Home Prices vs. Income Needed

Let’s look at a few examples from across the country:

Quebec

• Home price: $471,800 (⬆ 8.74% YoY)
• Income needed: $102,599 (⬆ from $94,354)

Ontario

• Home price: $908,000 (⬆ $9,300 YoY)
• Income needed: $189,489 (⬆ from $174,002)

British Columbia

• Home price: $10,200 more than last August
• Income needed: $205,492 (⬆ from $188,527)

Even in provinces where prices didn’t spike as much, higher rates are inflating the cost of borrowing — and that shows up in the income you now need to qualify.

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Where Can You Still Buy With Under $100K?

As of August 2023, six provinces still offer homes that are (relatively) affordable — meaning you’d need less than $100,000 in annual income to buy a typical property:

1. Newfoundland & Labrador – $63,055
2. Saskatchewan – $72,559
3. New Brunswick – $74,468
4. Prince Edward Island – $84,062
5. Nova Scotia – $85,752
6. Manitoba – $96,721

While prices in these provinces have also gone up, they still offer entry points for first-time buyers or remote workers who don’t need to live in major cities.

Want to know more about “Canada’s worsening affordability crisis”

Provinces That Now Need Over $100K to Buy

Meanwhile, in four provinces, the income required to buy has crossed the six-figure threshold:

1. British Columbia – $205,492
2. Ontario – $189,489
3. Alberta – $103,145
4. Quebec – $102,599

These numbers don’t just reflect home prices — they’re also impacted by higher mortgage qualification stress tests, which make borrowing harder, even for solid earners.

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Final Thoughts: What to Expect in the Coming Months

We’re seeing signs that the market may be slowly shifting back in buyers’ favour, but interest rates are the elephant in the room.
Without a significant rate drop — which many experts say is unlikely in 2023 — affordability will remain a challenge.

Here’s what to expect:

• Prices may keep rising modestly in fall due to market recovery
• Interest rates may plateau, but not fall significantly this year
• Affordability will stay stretched, especially in Ontario, BC, and Quebec
  
  

If you’re feeling like homeownership slipped even further out of reach this August, you’re not imagining it. National data shows that the income needed to afford a home rose by 8.27% in just one month — a clear sign that affordability continues to erode.

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Mortgage.Expert’s Take

If you’re feeling squeezed by these numbers, you’re not alone. But that doesn’t mean you have to give up your dream of homeownership.

Here’s what we recommend:

• Use our [Mortgage Income Calculator – placeholder] to see what homes you can afford in your province
• Lock in your pre-approval while rates are stable
• Compare rates across lenders (a 0.5% difference can mean thousands saved)
• Consider buying in a smaller city, where affordability is better

💡 Tip: With nesto, if you find a better rate, they’ll match it, beat it — or pay you $500.

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The Bottom Line

Buying a home in 2023 isn’t easy — but it’s still possible, especially if you plan smart, stay informed, and act quickly when the opportunity arises.
Whether you’re in Manitoba or Montreal, we’re here to help you navigate this new affordability landscape — without giving up your financial peace of mind.
👉 Talk to a Mortgage.Expert advisor today to build a plan that works for your income, budget, and goals.