Buying A House In Canada Has Never Been Harder, Years To Correct: RBC

Canada’s largest bank is warning that housing has never been less affordable. New data from RBC shows housing affordability is now the worst it has ever been as of Q4 2023. Income failed to keep up with mortgage payments, resulting in affordability erosion in every market they track. Forecast interest rate cuts are expected to make a slight improvement, but not much. 

Canadian Housing Affordability Has Never Been Worse

Canadian housing affordability has never been worse, according to RBC. A median household would need to spend 63.5% of its income to carry the mortgage on a “typical” home in Q4 2023. That’s a 1.7 point increase from the previous quarter, and the largest share ever. For context, the peak of the 1990s bubble was 57% of income—almost affordable in contrast. 

Buying A House In Canada Has Never Been Harder

Canadian ownership costs as a percentage of median household income. 

Source: RBC.

Every market tracked saw affordability erode, warns the bank. The markets with the worst levels were Vancouver (106.3% of income), Toronto (84.8%), and Victoria (80.2%). These cities are notoriously expensive, but their long-term averages now resemble levels “affordable” cities are currently at. 

The bank made special note of those historically affordable markets, now at their respective worst affordability levels ever. A median buyer needs to spend roughly half their income in Ottawa (49.9%), Montreal (53.3%), and Halifax (45.3%). 

Canadian Mortgage Payments Rose Much Faster Than Prices Dropped

The bank attributes the erosion of affordability to mortgage payments. The maximum budget shrunk 22% since Q1 2022, but home prices only fell 1.8% over the same period, according to the bank. The average payment for a buyer would be roughly $3,990—more than double the average payment existing homeowners pay.

Monetary policy changes should reduce prices but they take about 18 to 24 months for the impact to be seen. As the impact of the first rate hikes are starting to take hold, the conversation around cutting rates has already begun. Consequently, the narrative of prices rising once again never died—it was only pushed to the backburner. 

Canadian Housing Affordability To Improve, But Not Much

RBC expects affordability to start seeing improvements with rate cuts mid-year. Though don’t get too excited, they don’t see much improvement. 

“Under our base case scenario, the share of an average household income needed to cover ownership costs would only fall to mid-2022 levels by 2025,” explains Robert Hogue, assistant chief economist at RBC. 

Adding, “meaningfully restoring affordability will likely take years in many of Canada’s large markets. In this context, we expect the housing market’s recovery to be slow at first, before gaining momentum as interest rate cuts accumulate.” 

In short, the bank sees Canadian housing affordability at the worst level ever… without much improvement on the horizon. Great. 



We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • Steven Threndyle 1 month ago

    Think of how awesome the generational wealth transfer will be once the Boomers decide they DON’T want to move from their cozy houses and then, after spending their retirement money on lavish vacations and fantasy purchases like cars and boats, essentially leave their kids with a meager inheritance after spending their final decade at an $8k per year extended care facility. I foresee families living in cars at freeway rest stops, a phenomenon I first witnessed outside of Seattle in around 1985. Which WAS one doozy of a recession.

    • Lisa Downs 1 month ago

      CHIP reverse mortgages are available to homeowners who cannot afford their homes and do not have the income to qualify for a HELOC as young as 55.
      The interest rate is significantly higher than a traditional mortgage. Payments come out of your equity. No payments ever need to be made until the house is sold. If a retiree lives for decades after getting into this agreement there may not be much equity left. The Ontario Teacher’s Pension Fund owns CHIP and it is a publicly traded stock. In the past retirees downsized from that sprawling home to preserve their capital, not so now.

    • Lisa Downs 1 month ago

      Inherited wealth is not yours to spend, hold it securely in trust for your descendants.

  • Fraser 1 month ago

    lollllllllllllllll, tell us something we don’t know….its been unaffordable for 15 to 20 years now….we need a crash…and soon

    • Randy 1 month ago

      Got my house in TO for a song in 2015. They couldn’t give condos away back then. LOL

  • Frank 1 month ago

    Sounds pretty gloomy. Few ppl i know last week sold over asking best was $100k over. Depends on location and where the money comes from. Offshore money has been knocking it out of the park.

  • Dan McWilliams 1 month ago

    The Canadian dilemma. In order for prices to be affordable, interest rates need to drop. When rates drop investment companies will use the cheaper money to buy up more homes which have a better return than any Canadian stocks. Check mate home buyers!

  • BP 1 month ago

    It’s surprising how the rise in the cost of single detached homes isn’t being discussed within the banks as they’ve been approving mortgages that are hundreds of thousands of dollars over the assessed value of the house, increasing their mortgage debt to historic levels, which are, wait for it, never going to be paid back.
    The prices are the problem. And regulations are needed to keep people from buying multiple properties as rentals which is the main factor that led to this affordability issue, combined with lack of building and immigration.

  • Lee 1 month ago

    So much for the younger generation(s) ever having a place of their own, now struggling to keep their heads above water, but hey let’s have foreign buyers snap up real estate and have 25 people living in the same domicile….

  • Keith 1 month ago

    What I can’t understand is how long this can be sustained, with or without a pause on immigration. If the average (median income) person can’t afford a home, and rent continues to skyrocket, as it is also driven by mortgage costs, and investors making profits (god forbid they take a loss) – then at what point does the renter or average consumer hit their affordability limit? I would assume the average person is past there maximum affordability limit in the current environment. Will banks start selling credit (lending) to renters to cover the difference?

    Happy I chose engineering as a career and my skills are also needed elsewhere.

  • CD 1 month ago

    I always find it interesting how the poorest of immigrants who struggle enough to come and Canada to work are somehow blamed for being rich enough to qualify for mortgages and insurance and otherwise ruin Canada. I wonder if it’s facts or bigotry?

Comments are closed.