Home Affordability Slips in 9 of 10 Provinces Despite Declining Prices

Even with prices coming down, homes aren’t getting any easier to buy. In fact, affordability actually got worse in nearly every province across Canada. Why? Rising borrowing costs continue to outweigh the benefits of lower home prices, especially in provinces like Ontario, B.C., and Nova Scotia.

---

Canada’s Housing Market Feels the July Rate Hike

While the average Canadian home price dipped in many provinces this past July, affordability actually got worse almost everywhere. The culprit? Interest rates. Despite softer prices, the jump in mortgage costs made it more expensive to qualify for a home.
According to the August 15 CREA report, signs of market stabilization are emerging. Listings are climbing back to pre-pandemic norms and sales are cooling. That said, higher interest rates and inflationary pressure are still very much in the driver’s seat.
Let’s break down what happened in July:

• Home sales dropped 0.7% from the previous month, as expected during late summer.
• Compared to July 2022, total transactions were up by 8.7% — a sign that the post-pandemic price slump may be behind us.
• The national average home price sat at $668,754 — a 6.3% year-over-year increase.
• CREA’s Aggregate Composite MLS HPI rose 1.1% month-over-month — softer than gains from earlier in the spring, but still notable.

Behind the scenes, the July 12 Bank of Canada rate hike played a starring role. It pushed the prime rate to 7.20%, with the best 5-year fixed mortgage rates rising to 5.24% (up from 4.34% a year earlier). As borrowing costs surged, qualifying for a mortgage got harder — even as home prices dipped.

---

Home Affordability Continues to Erode in Most Provinces

Based on nesto’s latest data, 9 out of 10 provinces saw a rise in income needed to buy an average home — even though 7 out of 10 provinces saw actual home prices fall. That’s the paradox of today’s market: cheaper homes on paper, but pricier monthly payments.
Let’s take a closer look at Prince Edward Island. The average home price there fell by $9,500. Sounds great, right? But the income needed to buy actually increased by nearly $3,000 — rising from $79,087 to $82,032 — thanks to higher interest rates wiping out any affordability gains.
Even in provinces with price declines, affordability mostly moved in the wrong direction:

• Quebec saw prices fall by just over 1%, but the income needed still climbed to $101,477.
• Ontario had a $6,000 drop in average home price — but a higher qualifying rate meant households needed more income than last year to buy.

This underscores a bigger issue: unless interest rates come down, declining prices alone won’t be enough to bring buyers back in droves.

---

The Only Province Where Affordability Improved

British Columbia was the lone exception in July. Home prices fell by $17,800, and — for once — this was enough to offset rising rates. The result? A drop of $12,003 in income required to buy a home.
That brought the affordability threshold to $204,569. Still a massive number, but a slight step in the right direction for would-be buyers in Canada’s most expensive province.
CREA’s data continues to paint a familiar picture: when rates rise faster than prices fall, affordability suffers. And unless something shifts in the coming months, many Canadians will remain locked out of the housing market.

---

Where You Can Still Buy on a Sub-$100K Salary

Despite the national squeeze, six provinces remain relatively accessible — at least by current standards — for buyers earning under $100,000 annually.

Here’s where homeownership is still within reach:

Province	Income Needed (August 2023)
Newfoundland & Labrador	$61,534
Saskatchewan	$73,172
New Brunswick	$73,655
Prince Edward Island	$82,032
Nova Scotia	$84,992
Manitoba	$94,660

By contrast, four provinces now require six-figure salaries to afford the average home:

Province	Income Needed (August 2023)
British Columbia	$204,569
Ontario	$190,541
Alberta	$102,053
Quebec	$101,477

---

Final Thoughts & Predictions for Next Month

While some may be encouraged by softer prices and balanced market signals, the reality is that affordability is still slipping. Rates remain the biggest obstacle — and unless the Bank of Canada pivots, most Canadians will continue to struggle with housing costs.
Looking ahead to September’s numbers, we expect to see more of the same. Home prices may continue to level off, but with interest rates holding firm or even rising again, don’t expect major affordability gains anytime soon.
That said, it’s not all doom and gloom. If you’re shopping for a mortgage, comparing rates is more important than ever. And with the right lender — or a savvy mortgage broker in your corner — you might still find a way to make your dream home happen.
With affordability continuing to erode across the country, you might want to read more on affordability & income requirements to understand what’s driving the increase in monthly housing costs.
For a closer look at how affordability slipped further last month, check out our full breakdown of the August 2025 home affordability data where income requirements jumped by 8.27% nationwide.

---

Why Choose Mortgage.Expert

At Mortgage.Expert, we don’t believe in one-size-fits-all advice. We take time to understand your situation and help you find the smartest path to homeownership — even in a high-rate market. Whether you’re buying, refinancing, or just planning ahead, our advice is free, personalized, and pressure-free.
Book your consultation today. Let’s find your path to affordable homeownership — together.