Lower prices lift buying power for Canadians
Toronto and Vancouver, Canada’s two most expensive housing markets, recorded the largest improvements in home-buying affordability in September.
Ratehub.ca's monthly affordability report showed that n Toronto, the average home price fell by $9,400, lowering the required annual income by $2,130 and reducing the average monthly mortgage payment by $58 to $4,917. In Vancouver, prices dropped by $8,300 and required income declined by $2,000.
According to Ratehub, 11 out of 13 major Canadian cities saw improved affordability compared with August. The report tracks changes in home prices, mortgage rates and stress-test levels to calculate the minimum income needed to buy an average-priced home.
The average five-year fixed mortgage rate edged down to 4.47% from 4.49%, while the qualifying stress-test rate eased to 6.47% from 6.49%. Because borrowing costs remained essentially stable, the decline in home prices was the primary factor behind improved affordability.
In cities beyond Toronto and Vancouver, affordability also improved. Calgary, Regina and Victoria all required approximately $900 to $1,100 less income compared with August.
Conversely, the affordability trend did not hold everywhere. In Montreal and Halifax, modest price increases pushed the income needed to buy a home up by $1,040 and $210, respectively.
On the broader market stage, the Canadian Real Estate Association reported that national home sales fell 1.7% from August but remained 5.2% higher than a year earlier, making September the busiest since 2021.
The national average sale price rose 0.7% year-over-year to $676,154, while the MLS Home Price Index slipped 0.1% month-over-month.
The Ratehub.ca report noted that the lowest five-year variable mortgage rate narrowed to 3.70%—the lowest since mid-2022—and the best five-year fixed rate stood at 3.79%. On a home priced at $676,154, the variable rate would save about $84 per month or $1,008 per year; the fixed-rate savings were estimated at $233 per month or $2,796 per year.
While affordability gains in Toronto and Vancouver were the most pronounced, the data indicate that homebuyers in many markets experienced modest relief. The combination of lower home prices and flat borrowing rates helped reduce the income threshold and monthly payment burdens in September.
