It hasn’t been this affordable to own a home in Canada in three years, according to RBC Economics.

Its latest national affordability measure dropped to 55.1% in the first quarter of 2025, down from 60.7% a year ago. The improvement was driven by interest rate cuts, small declines in home prices, and steady household income growth.

“Generally improving trends are likely to be sustained,” said Robert Hogue, assistant chief economist at RBC. “We see earlier interest rate cuts continuing to favourably impact affordability with price declines in some markets further aiding the process.”

But while conditions are improving, affordability remains far from pre-pandemic levels. “Steady improvements in the past five quarters have reversed only roughly a third of the loss of affordability nationwide,” Hogue said. “Buying conditions remain extremely challenging in many major markets.”

He added that condo buyers have seen the biggest improvements. “In some parts of the country—including Edmonton, Saskatoon, Regina, Winnipeg and even Toronto—the condo affordability measure is now effectively back to where it was before the pandemic,” he noted.

Vancouver, Toronto still the least affordable markets

Even with improvements, owning a typical home in Vancouver still requires 92.7% of a median household’s income. Toronto stands at 68.3%, followed by Montreal at 49.5%.

Calgary (42.3%), Ottawa (44.3%) and Edmonton (33.0%) remain among the more affordable large markets.

“Price drops also quickened the improvement in condo affordability in Vancouver and Victoria—Canada’s two other priciest markets—though both still have a lot more lost ground to recover,” Hogue said.

RBC expects further relief ahead

“We think interest rate cuts, further price drops in some markets and sustained income gains are set to reverse approximately half the rise in RBC’s composite affordability measure for Canada during the pandemic by year end,” Hogue added.

But the bank cautions that “any further progress gets trickier once interest rates stabilize,” as future improvement will depend entirely on home prices and household income.

“Affordability will remain a huge issue in many parts of the country—and a major obstacle hindering recovery,” Hogue concluded.

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Last modified: July 3, 2025