Rate Cuts Narrow Canada's Housing Affordability Gap

Canada’s Parliamentary Budget Officer reports the national housing affordability gap narrowed from 80% in September 2023 to 34% in August 2025, driven in part by cheaper borrowing after Bank of Canada rate cuts to 2.5%, stronger wages and lower home prices. The gains are concentrated in pricier markets such as Toronto and Hamilton, but the PBO warns national averages mask wide local variation and that households in Toronto, Vancouver and Victoria remain more financially vulnerable. Regional results vary: Halifax has the largest 74% gap and Edmonton the smallest at 4%, while Calgary, Montreal and Québec City saw affordability deteriorate despite lower mortgage carrying costs. The London–St. Thomas market slipped into a buyer’s market in September, with roughly three in ten listings sold (534 homes) and average sale prices falling to $622,805 from $651,329 in August. Analysts and local realtors attribute cooling buyer demand to job concerns in automotive and agricultural sectors even as lower rates create buying opportunities. Parliamentarians are debating policy responses to address the persistent and divergent regional affordability challenges.