Homeownership gets cheaper, but momentum is fading: RBC

Homeownership in Canada has become modestly more affordable, but the pace of improvement is slowing, and conditions remain tough for many buyers, according to RBC assistant chief economist Robert Hogue.

RBC’s national aggregate affordability measure, or the share of pre-tax household income needed to cover ownership costs, eased for a seventh straight quarter in the third quarter of 2025. However, it was the smallest drop since affordability began to improve in early 2024.

Progress slows down

The RBC index trailed down to 53.2 per cent in the latest quarter, an improvement from its all-time high of 63.5 per cent in 2023. However, this most recent 0.4 percentage point decline was “the slimmest this cycle,” the report notes, as stable mortgage rates limited further progress.

Hogue said the combination of earlier interest rate cuts with some price and income moves have helped, but “they’ve only partly reversed the historic spike from soaring prices during the pandemic.”

Mixed picture across major cities

While the national numbers show slight relief, the experience varies by region.

Big markets where prices have softened, especially Vancouver and Toronto, accounted for most of the overall improvement. Smaller gains were also seen in Victoria, B.C., Halifax, N.S., and Saint John, N.B. 

Still, owning a home in many of these cities remains significantly more expensive than before the pandemic. In Vancouver and Victoria, ownership costs are still roughly 24 and 19 percentage points higher, respectively, than in late 2019, notes the report. 

Elsewhere, conditions were flatter or even worse in Q3. Quebec City posted one of the largest quarterly increases in the share of income needed for homeownership. Montreal and Ottawa also showed tight affordability despite modest market shifts in their favour. Saskatoon and Edmonton came closest to their pre-pandemic affordability norms, though costs there remain elevated relative to historical averages.

Source: RBC

What comes next

RBC expects further gains in affordability to be small. With interest rates likely to remain steady for the foreseeable future, the report suggests that any material improvements will depend on household income growth and price corrections in select markets. 

Hogue adds that Canada may be nearing the “end of the recuperation phase” in some regions, meaning the easy gains may be behind the market unless prices fall more sharply or incomes rise faster than forecast. 

Despite some easing, RBC stresses that housing remains less affordable than it was before the pandemic, and many prospective buyers are still struggling with the burden of higher costs. 

“It’s no surprise many prospective buyers remain hesitant,” said Hogue. “They have yet to see a full reversal of the earlier massive loss of purchasing power.”