Lower home prices and mortgage rates improve August affordability: Report

Easing home prices and declining mortgage rates have enhanced housing affordability in most major Canadian cities, according to a report by Ratehub released on Wednesday. The report has indicated that the minimum income required to purchase an average home fell in 12 of 13 surveyed cities in August.

Toronto, Victoria, and Vancouver experienced the most significant improvements. In Toronto, the minimum household income necessary to afford the average home decreased nearly $5,000 from July to $204,100, as average home prices dropped over $15,000.

The average five-year fixed mortgage rate fell to 5.16%, contributing to affordability gains. However, St. John’s, N.L., was the only city to see increased income requirements due to a $4,900 rise in average home prices. Despite recent improvements, affordability remains below pre-pandemic levels, according to National Bank of Canada economists.